By David Dolan and Rocky Swift

TOKYO (Reuters) -A $39 billion Canadian takeover bid for 7-Eleven's owner indicates a shift in Japan's corporate governance and has left CEOs "nervous" that their companies could be next, the head of drinks giant Suntory Holdings said on Wednesday.

Seven & i's response in rejecting the bid by Alimentation Couche-Tard also revealed companies are no longer simply rebuffing foreign offers outright and are instead focusing on value, the chief executive of Suntory, Takeshi Niinami, said in a Reuters NEXT Newsmaker interview.

Niinami, 65, is one of Japan's most influential executives, serving as chair of the Keizai Doyukai business lobby and also as an economic adviser to current and former prime ministers.

"I think Seven & i responded fairly," Niinami said. The company's rejection of Couche-Tard's bid last week "demonstrates that Japan's corporate governance has been advancing."

But he added the bid has made Japanese executives look over their shoulders fearing a similar challenge in their own companies.

Governance reforms and Japan's emergence from deflation are forcing companies to focus more on returns on equity, he said, adding the weak yen has been an "amplifier" for change as it puts more pressure on companies to create value or risk being acquired.

A graduate of Harvard Business School, Niinami was chief executive of convenience store operator Lawson before becoming the first non-founding family member to head Suntory.

In 2014, he led a $16 billion takeover of U.S. spirits maker Beam and has driven expansions of century-old Suntory into India and China.

SUNTORY PRIMED FOR M&A

Overseas acquisitions remain a hot topic in Japan, where outbound deal value in 2024 stands at a 17-year high, despite a historically weak yen. Perhaps the most contentious has been Nippon Steel's offer to buy U.S. Steel, a deal that has been opposed by both leading candidates in the U.S. presidential election.

Niinami said Nippon Steel's bid would be good for U.S. Steel and the American economy, and that the opposition was "a matter of politics".

Japanese companies still have a "strong appetite" to invest in the U.S., he added. Suntory is always looking to pick up brands to add to its portfolio and could afford a purchase in the $10 billion range, though there are no immediate candidates, Niinami said.

As for the Japanese economy, the central bank has done a "great job" in communicating to the market its intention to normalise monetary policy, he said, adding that benchmark interest rates could rise further to 1% from the current 0.25% in six to nine months.

Dynamism is returning to the Japanese economy but care must be taken to maintain momentum in wage growth, Niinami said.

"Wage increases should be sustainable to create the appetite of consumption of the general public," he said. "We lost the animal spirits because of two decades of deflation. Now is the time to act."

(Reporting by David Dolan and Rocky Swift; Editing by Muralikumar Anantharaman)