Seven & i Holdings' (TYO:3382) attempts to resist Alimentation Couche-Tard's (ACT) takeover bid could bear down on its credit profile, S&P Global Ratings said in a Friday release.

The rating agency believes the Japanese retail group was compelled toward efforts to raise its shareholder value following an increase in the ACT's buyout offer to 7 trillion yen.

Rejecting ACT's offer would mean greater pressure on Seven & i to prove to shareholders how to grow the company, use money more efficiently and yield a better return.

S&P will look into the financial effect of such efforts following a planned reorganization of the company's group companies, such as Ito-Yokado.

S&P sees modest growth in Seven & i's earnings over the next one to two years due to the strain on its offshore convenience store segment, which comprises half of its EBITDA.

The retailer's domestic convenience store business will provide profit relief despite tempered consumer demand, the rating agency said.

Still, S&P views a weak earnings recovery as impacting the company's debt-to-EBITDA ratio, which could decline to about 3x from 2.6x in fiscal 2023 and prompt a rating downgrade.

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