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Tongjitang Chinese Medicines Company (NYSE: TCM) reported that the offer to buy the company has been withdrawn. The offer was made by Tongjitang’s Chairman and CEO, Mr. Xiaochun Wang, and a director, Mr. Yongcun Chen, who proposed buying the company at a price of $10.20 per ADS (or $2.55 per ordinary share). No reason was given for the withdrawal of the offer.

The shares of Tongjitang Chinese Medicines responded by giving up almost one-third of their value. In mid-session trading, TCM was down $2.22 at $4.45, a 32% decline. The price was volatile Monday, trading between $3.80 and $5.30. The entire range of Monday’s session is below the previous low price for the company’s stock, which was $6.42.

The Board’s independent directors were in charge of evaluating the buyout, and they had engaged Morgan Stanley for professional advice.

Investors always remained skeptical about the possibility that the deal would be completed. The price of the company’s stock never rose higher than $9 after the offer was made on March 9, 2008.

Tongjitang priced its IPO at $10 per share in March of 2007.

Disclosure: none.

Source: Tongjitang Slides After Buyout Offer Withdrawn