Japan's Itochu is withdrawing from a buyout for Seven & i Holdings proposed by the retailer's founding family, two sources with knowledge of the matter said, Reuters is reporting.

After receiving a takeover bid from Canada's Alimentation Couche-Tard (ATD-TO) last year, Seven & i's founding Ito family began talks to take the company private for an estimated $58-billion.

The Nikkei newspaper first reported earlier on Wednesday that Itochu had decided not to participate in the buyout.

Itochu had considered investing 1 trillion yen ($6.69-billion) in the deal but ultimately saw few synergies between its food and beverage business and Seven & i, Nikkei said.

Seven & i and Itochu declined to comment.

Itochu's decision to bow out casts a shadow on the prospect of the Ito family's proposed management buyout, which would be the largest in history if successful.

Going private would allow the operator of more than 80,000 7-Eleven convenience stores around the world to retain its management and remove pressure from shareholders to sell off more of its assets -- as well as eliminate the threat from a bidder that it may see as hostile.

A management buyout offer could also be a tactic to force Couche-Tard to bid more.

The CEO of the Canadian retailer said in November it would persist in its efforts to pursue a deal with Seven & i.

Itochu's reported participation was seen as complicated by the trading house's ownership of one of Seven & i's competitors, convenience store chain FamilyMart.

(Market Chatter news is derived from conversations with market professionals globally, and/or from other media sources. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)