The stock price of the nutritional supplements chain fell 10.39% to $6.47 a share as investors reacted to the demise of the competing offer.
(The story has been corrected from an earlier version, which reported that Liberty Tax had been unable to obtain financing for the deal.)
In a filing with the Securities and Exchange Commission, Vitamin Shoppe said it had "determined to cease negotiations" with the unnamed, competing buyer "in light of the failure of the bidder to obtain committed financing."
However, the Vitamin Shoppe said the loss of the competing bid will have no impact on Liberty Tax's acquisition plans, which are moving forward as planned.
In its SEC filing, the Vitamin Shoppe noted its board of directors - and the special committee that worked on the deal - has not changed its recommendation in favor of the "pending merger" and "each expressly reaffirms its recommendation in favor of the pending merger with Franchise Group."
The Vitamin Shoppe went public in 2009, but has struggled since with declining earnings.
In August, Liberty Tax laid out plans to acquire Vitamin Shoppe in an all-cash transaction valued at $208 million, or $6.50 a share.
The transaction is slated to close in the fourth quarter, with Liberty Tax, parent company of Liberty Tax Service and Buddy's Home Furnishings, obtaining $170 million in debt financing.
Liberty has said it has debt commitment letters and "an equity commitment letter with an affiliate of Vintage Capital Management."