Seven & i shares give up some gains after Couche-Tard bid

TOKYO (Reuters) -Shares of Japan's Seven & i Holdings fell 8% in morning trade on Tuesday, giving up some of their gains from the previous day, when they surged on news of a takeover proposal from Canada's Alimentation Couche-Tard.

While the value of the offer has not been disclosed, it would make the 7-Eleven owner the largest-ever Japanese target of a foreign buyout. Couche-Tard owns the Circle-K chain of convenience stores.

Seven & i said it has set up a committee composed only of independent directors to review Couche-Tard's proposal which includes buying all of the company's outstanding shares.

The Canadian company confirmed a "friendly proposal" was sent to Seven & i, adding it was focused on reaching a mutually agreeable transaction.

"Couche-Tard tried to takeover Carrefour so they've been looking for a large acquisition and so to see a deal like this be proposed is not shocking" said Cole Smead, chief executive of Smead Capital Management, which owns shares in the Canadian company.

"Couche-Tard can greatly increase the margin and profitability of the existing Seven and i Speedway and 7 Eleven locations," he said, adding "they have a history of buying assets and improving the margin in the overall business."

Jefferies said in a research note that Seven & i's decision to set up an independent committee was positive. But it added that "hurdles remain on the scale of the transaction and antitrust issues".

On Monday, the news of the deal sent Seven's shares surging by almost 23% in Tokyo, valuing the retailer at around 5.6 trillion yen ($38 billion).

Couche-Tard is valued at roughly $58 billion.

($1 = 146.2800 yen)

(Reporting by Mariko Katsumura; Additional reporting by Ananya Rajesh; Editing by David Dolan, Stephen Coates and Edwina Gibbs)