Lorillard Inc., the largest U.S. maker of menthol cigarettes, fell the most in five months after the U.S. Food and Drug Administration named a new chief for its tobacco unit.
Lorillard slumped 3.8 percent to $41.15 at the close in New York, its biggest drop since Sept. 12. The shares gave up almost half of their gain this year after having risen 10 percent through yesterday.
Mitchell Zeller, a previous FDA tobacco regulator, takes over from Larry Deyton as head of the Center for Tobacco Products March 4, Margaret Hamburg, the agency’s commissioner, said yesterday in a memo to employees. The FDA is reviewing whether to ban menthol, a minty flavoring, under a 2009 law restricting tobacco marketing and barring cigarette makers from adding flavors such as clove and strawberry.
Lorillard Chief Executive Officer Murray Kessler has said menthol cigarettes don’t warrant greater regulation than regular cigarettes. Robert Bannon, a spokesman for the Greensboro, North Carolina-based company, declined today to comment on Zeller’s appointment.
Zeller’s appointment represents “a firm indication of the FDA’s continued commitment to serious regulatory efforts in this area,” Patrick Hughes, an analyst with investment advisers Height Analytics LLC in Washington, said today in a note.
The company said on Feb. 13 that it controlled 38.3 percent of the U.S. market for menthol cigarettes.
The American Legacy Foundation, an anti-tobacco group based in Washington, welcomed the appointment of Zeller, saying in a statement that the hiring of an “accomplished lawyer, tobacco control strategist and advocate for public health” signals the FDA’s commitment to “ending the tobacco epidemic.”
With assistance from Anna Edney in Washington. Editors: Anita Sharpe, James Callan