(Yicai) Feb. 22 -- Shares of China Traditional Chinese Medicine Holdings soared more than 20 percent after the company said China National Pharmaceutical Group, its biggest shareholder, has offered to take it private in a HKD15.6 billion (USD2.2 billion) deal.

At the close in Hong Kong, China TCM [HKG: 0570] was 24.2 percent higher at HKD4.26 (USD54 cents) a share, giving it a market capitalization of HKD21.5 billion (USD2.7 billion).

State-owned China National Pharmaceutical, also known as Sinopharm, plans to take China TCM private at HKD4.60 a share, the Foshan-based maker of traditional Chinese medicines said in an statement last night.

Listed in 1993, China TCM is Sinopharm’s main subsidiary in traditional Chinese medicine. Beijing-based Sinopharm, China’s biggest drugmaker, owns about 32.5 percent of China TCM, making it the largest shareholder.

There has been speculation that China TCM may be integrated with Chongqing Taiji Industry, another listed maker of traditional Chinese medicines controlled by Sinopharm. Neither Sinopharm nor China TCM have commented on the matter.

China TCM’s shares have been in the doldrums, limiting the firm’s ability to raise funds in the capital market, it said. The firm’s privatization can also streamline its shareholding structure and avoid the additional governance costs and management expenses required to maintain its listed status, China TCM added.

China TCM’s net profit jumped 40 percent to CNY579 million (USD80.5 million) in the first half of last year from a year earlier on a 57 percent surge in revenue to CNY9.3 billion (USD1.3 billion). Full-year profit is expected to have soared by 85 percent to 95 percent, it has said.

Sinopharm controls nine listed companies and had revenue last year of more than CNY700 billion (USD97 billion).

Editors: Dou Shicong, Tom Litting