TOKYO (Reuters) - Japan's Seven & I Holdings said on Thursday the retailer's founding Ito family could not secure the financing required for a $58 billion management buyout, and it would consider a rival offer from Canada's Alimentation Couche-Tard.

"There is no actionable proposal from Mr. Junro Ito and Ito-Kogyo for 7&i to consider at this time," the company said in a statement.

"7&i remains committed to exploring all opportunities to unlock value for shareholders and continues to assess a full range of strategic alternatives, including the proposal from Alimentation Couche-Tard."

Itochu said in a statement it had ended its consideration of participating in the Seven & I founding family's buyout proposal.

The failure of the management buyout heightens the likelihood of Couche-Tard pulling off a mammoth acquisition of one of Japan's best-known and most beloved retailers, which owns 7-Eleven convenience stores.

Seven & i's shares sank 12%, while Itochu shares were rallied more than 6% in early trading in Tokyo on Thursday after the retailer confirmed a report in the Yomiuri newspaper that it was set to abandon the management buyout.

Circle K convenience store owner Couche-Tard's $47 billion bid for Seven & I is one of the most prominent examples of the surge in international interest in Japanese assets in recent years. An exit from deflation and deepening corporate governance reforms have drawn more investors to a market once seen as all but untouchable for foreigners.

A spokesperson for the Canadian retailer said on Wednesday that Couche-Tard remained committed to reaching a mutually agreeable transaction with Seven & I.

After receiving a takeover bid from Couche-Tard last year, Seven & i's founding family had begun talks to take the convenience store owner private in what would have been the largest management buyout in history if successful.

Couche-Tard had offered $38.5 billion, but raised it to $47 billion after Seven & I rejected the initial bid.

(Reporting by Kantaro Komiya and Satoshi Sugiyama; Additional reporting by Mariko Katsumura; Editing by Leslie Adler and Jamie Freed)