A plan for Japanese retail giant Seven & i Holdings Co to separately sell some of its noncore specialty store businesses is being floated as part of an effort to offload shares in its intermediate subsidiary York Holdings Co, a source close to the matter said Saturday.

The idea to spin off the noncore businesses, such as those in lifestyle goods and children's apparel, was proposed by potential buyers, the source said.

The moves come as many potential buyers that participated in the first round of bidding for shares of York Holdings, which operates 31 retailers, appear primarily interested in its supermarket operations centered on Ito-Yokado, the source said.

Seven & i has been focusing more on its convenience store business by separating it from noncore operations amid a takeover bid from Canada's Alimentation Couche-Tard Inc.

The Japanese retailer, which closed the first round of bidding for York Holdings' shares on Thursday, plans to sell a majority stake in the subsidiary by February 2026, turning it into an equity-method affiliate.

According to the source, Seven & i is seeking a buyer capable of enhancing the real estate value of stores near train stations and other prime locations while focusing on supermarket operations centered on food products.

In addition to the Loft outlet chain and children's clothing chain Akachan Honpo Co, York Holdings also operates Denny's casual restaurants. If the plan to spin off the specialty stores proceeds, separate sale processes will be initiated outside the current bidding for York Holdings.

Participants in the first round of bidding included major Japanese trading company Sumitomo Corp., which operates the Summit supermarket chain in Tokyo and its vicinity, and U.S. fund Fortress Investment Group LLC, which acquired Seven & i's department store unit Sogo & Seibu in September last year.