Execs pull out of buying Tongjitang

Tongjitang Chinese Medicines Co, a specialty pharmaceutical firm focusing on the development, manufacturing, marketing and selling of modernized traditional Chinese medicine in China, says that Xiaochun Wang, chairman and chief executive of the company, and director Yongcun Chen, have withdrawn their proposal to acquire all outstanding shares of the drugmaker in a letter to the board of directors dated June 27. The immediate response to the news was a 32% plunge in Tongjitang's share price to $4.45.

Tongjitang previously received a letter dated March 9 from Messrs Wang and Chen, proposing to acquire all the firm's outstanding ordinary stock (including that in the form of American Depositary Shares) in a scheme-of-arrangement transaction under Cayman Island law that would result in the company becoming privately-held. The two executives had proposed paying $2.55 in cash for each outstanding share (or $10.20 per ADS), but stated that they had withdrawn the offer due to the recent deterioration of the credit market.