Dunelm hit by Adderley cannonball

Will Adderley, Executive Deputy Chairman of Dunelm and the son of the founder of the company, plans to cash in a big chunk of his shares in the bedding and curtains retailer.

Adderley and his wife, Nadine, are offloading around 5m shares, representing about 2.5% of the issued share capital of Dunelm. The disposal will still leave the Adderley family holding around 56.2% of all the Dunelm shares in issue, with Will Adderley's personal stake standing at 32.4%. That's a few too many eggs in one basket for Adderley and his wife, who are seeking to diversify their portfolio.

Under the terms of the placing agreement, Will and Nadine Adderley have agreed that, following completion of the placing, they will not dispose of further shares in the Company for a period of at least six months.

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Will Adderley joined the Dunelm business in 1992 and took over the running of the group from his father, Bill, in 1996. Will Adderley relinquished the role of Chief Executive in February 2011, since when he has been Executive Deputy Chairman, a full-time board position. Despite the share sale, Adderley has insisted that he remains fully committed to the company which, given the size of his remaining stake, probably did not need stating.

The price at which the shares will be placed has not been determined yet, but with a large chunk of shares now hanging over the market the share price had dipped by almost 23p to just under 486p in the first two hours of trading on the morning the placing was announced.

Panmure Gordon reckons that, "as management near the end of their interim results roadshow, we would presume that the book-runners will have in principle placed the shares already."

The broker regards the increase in free float - the proportion of shares not held by committed long-term holders - as a positive development, as the Adderley family stake in Dunelm remains very significant at 56.2%.

"Recall that Will Adderley's beneficial shareholding in the company increased as a result of receipt of a gift of 20 million ordinary shares from his father, founder of Dunelm, Bill Adderley, on 14th December 2010, taking his interest in the company's shares to 70.5 million shares - 5 million shares in this context is a small proportion," noted Panmure Gordon analyst Jean Roche.

Panmure Gordon's view on the stock is unchanged as a result of the news, and it is sticking with its "buy" recommendation and 600p price target, though it would not be surprised if there were more share sales from the Adderley family down the road.

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