Seven female heirs in the Wilhelmsen family are fed up with the power in the family shipping company still being vested in just one man.

They are offering roughly NOK 3.2bn ($353m) to get rid of chief executive Thomas Wilhelmsen.

The power struggle for the empire worth billions and thereby for control of the Wilh Wilhelmsen Holding shipping company came to a head after shipowner Wilhelm Wilhelmsen died in February.

The 'rebels', who have been demanding control of their own holdings in the Wilhelmsen family business for quite some time, have made a huge bid in an effort to resolve a situation that has been deadlocked.

The seven female Wilhelmsen heirs have upped the ante in the family power struggle, and want to take over the entire shipping empire.

One of Norway's oldest shipping companies, Wilh Wilhelmsen Holding is a listed maritime conglomerate with more than 15,000 employees worldwide.

The point of the offer is to push CEO and heir Thomas Wilhelmsen, 46, out of the family's companies completely.

The rebels have allied themselves with investment bank Carnegie. On 22 May this year, a written offer was submitted to Thomas Wilhelmsen.

"There appears to be no foundation for a continued joint ownership," Petter J Hagen, head of investment banking at Carnegie, stated in the offer document.

Cathrine Lovenskiold Wilhelmsen is taking the lead for the heirs in the Wilhelmsen family. Photo: Fredrik Solstad

According to DN's calculations, the offer is worth roughly NOK 3.2bn.

The rebels are of the opinion that there are formidable hidden values in the Wilh Wilhelmsen companies, and they have offered Thomas Wilhelmsen more than twice the market price for his shares.

Instead of being bought out, he said that in order to be solution-oriented, he might be willing to buy out the so-called M7 group of rebels.

"We are still willing to continue the dialogue about an exit for them," wrote Thomas Wilhelmsen.

Hidden values

The rebels call themselves the M7 group: M stands for 'majority', and 7 for the seven shareholders in the group.

It consists of three of the four branches of the late Wilhelm Wilhelmsen's immediate family, including his sister Helen Juell, 73, and six cousins who are descendants of Wilhelm Wilhelmsen's sister Cecilie Paus, 76, and his late brother Finn Wilhelmsen.

On the other side of the dispute are the heirs of Wilhelm Wilhelmsen — Thomas Wilhelmsen, his mother and his two sisters.

"The M7 group has an significantly larger financial stake than you have. In the light of this, and given our strong desire to modernise and professionalise the family-owned companies as well as the listed companies, we have decided to put forward an offer to acquire all the shares you own, directly and indirectly," offer stated.

"This is the preferred way to conclude our joint ownership, and it will resolve the long-drawn-out points of contention as to how we want to develop the family-owned companies in future."

The offer reads like a declaration, describing a confrontation with what the M7 group maintains is a culture ruled by a single individual, a weak form of corporate leadership and an old-fashioned ownership structure that deprives the real owners of control over their own interests.

The rebels confirm that a change of ownership within the family will be an advantage for all the shareholders in the listed shipping company.

"Today's structure hides significant underlying values […] and layers upon layers with discounts to fair market values," said Carnegie.

Shipping legacy

The background for the family feud was described in the Dagens Naeringsliv article Family Rebellion in the Wilh Wilhelmsen Shipping Company published on 14 February this year.

When shipowner Wilhelm Wilhelmsen took over the helm of the shipping company from his father Tom, he was chosen as the heir from among four siblings, who were to divide the estate equally.

For more than 40 years, they owned the shipping company in peaceful coexistence. Wilhelm Wilhelmsen had a controlling shareholding that gave him full control of the shipping group in actual practice.

Wilh Wilhelmsen headquarters in Lysaker, Norway. Photo: Elin Hoyland

In recent years, there has been a change in the family mentality. The skewed distribution of power in relation to the assets themselves became a smouldering source of dissatisfaction within the family. Where there were once four siblings with different ideas about how to run the family-owned companies, now there were nine cousins.

Changing lines of succession and clean-ups made it clear that the branches of the family who owned most of the family's shares in the shipping company were eager for change.

And the assumptions underlying the choice to allow one person to control all the family's assets have changed.

Generation change

In 2018, the branch of the family favouring change communicated that things that had worked for the fourth generation in the shipping company, would simply not enjoy the same support from the fifth generation.

Just before the summer of 2019, Wilhelm Wilhelmsen, then more than 80 years old, nevertheless made it clear that his son Thomas, 46, was to inherit his position as head of the family-owned companies.

Thomas Wilhelmsen was subsequently named chairman of the board in the controlling family-owned company and owner of the controlling A share, making him head of all the family-owned companies, a financial fortune worth NOK 2.5bn ($276m) and the assets of the family members who are owners without voting rights.

In early February this year, the conflict surfaced when Cathrine Lovenskiold Wilhelmsen, 51, resigned from the board of Wilh Wilhelmsen Holding. In a stock exchange announcement, she told the market that her decision was due to an internal conflict regarding the family's ownership of the shipping company.

That statement made the insurrection in the Wilhelmsen family public knowledge for the first time. Six cousins and two aunts climbed the barricades against Wilhelm Wilhelmsen and his son, Thomas.

"We are concerned about the businesses, the workplaces, the employees, the environment and the community at large, and we want to help decide how the family's capital is invested. We are unable to do that today," Cathrine Lovenskiold Wilhelmsen said in February.

A week later, Wilhelm Wilhelmsen committed suicide at the age of 82.

The offer document shows that the family feud did not die with Wilhelm Wilhelmsen. Quite to the contrary, the gap between the front lines widened further.

Revolt

"A predetermined male lineage has no legitimacy in a society based on gender equality, corporate governance and meritocracy," Carnegie said in the offer document on behalf of the seven female Wilhelmsen heirs.

The offer document describes the controlling A share as being "antiquated", "without legitimacy" and "pointless".

"A business such as the Wilhelmsen Group needs constant modernisation and professionalisation in order to keep up with the demands in the market and social development," underscored Carnegie on behalf of the Wilhelmsen heirs.

In an email to Dagens Naeringsliv, Cathrine Lovenskiold Wilhelmsen, who is taking the lead for the heirs, said the M7 group believes there are vast hidden assets within the Wilhelmsen Group.

"I can confirm that just prior to summer, an offer was made to buy Thomas and his family out," she wrote, adding that their advisor describer how the group's corporate structure allows vast assets to be concealed. "The offer is based on the assumption that the value of the listed assets was 147% higher than the market price on the stock exchange on the relevant date."

Carnegie's Petter J Hagen said: "It is correct that our clients have made Thomas Wilhelmsen and his immediate family an offer to buy their shares in the family-owned companies. We are in negotiations with the other party's advisers, so I do not intend to discuss the proposed solution in the media at this point."

Hanging tough

Thomas Wilhelmsen, in an email response to Dagens Naeringsliv, said: "We are not interested in selling our shares."

"We see the frustration felt by the heirs in the M7 group over not being entitled to use the Wilhelmsen Group's assets for their own purposes, with the exception of the annual yield on their shares," he added. He speaks on behalf of his mother and two sisters.

Instead of being bought out, he countered that in order to be solution-oriented, he might be willing to buy out the M7 group.

We believe that today's ownership structure and management model prevent wealth creation in the family's companies as well as in the listed Group. After many years of trying to no avail to have our voices heard through a dialogue, our offer is yet another attempt to promote change.

Cathrine Lovenskiold Wilhelmsen

"We have always been willing to discuss exit opportunities for the M7 group, and we are surprised that anyone in the M7 group believes that there is no common ground for achieving an amicable solution.

"We, on the other hand, are still interested in continuing the dialogue regarding an exit for them, based on market conditions."

Thomas Wilhelmsen described the accusations from the rebels as being both "incorrect and unproven".

And he reacted to the fact that the conflict is now out in the open, and believed it is a step in the M7 group's strategy to step up the pressure for a solution.

"Our attitude is that we are best served by finding a good solution for our jointly-owned family fortune outside of the public space," Thomas Wilhelmsen continued.

The chief executive, with support from his mother Ninni and sisters Julie Baumann and Monica Wilhelmsen, has rejected the offer through his attorney Marius Moursund Gisvold.

The lawyer also disputes the M7 group's portrayal of the situation in the family-owned companies.

"Today's ownership structure is based on principles laid down by the generations that have come before us, and it is still the preferred form of ownership, with just one representative of the family being in charge of business operations," Gisvold stated in a letter to the rebel group dated 5 June this year.

Gisvold pointed out that the offer from the rebels came completely "out of the blue".

"Thomas Wilhelmsen was the appointed heir apparent for his generation after many years of service in the Wilhelmsen Group. He has devoted his professional life to his career, and he remains motivated to continue.

"Meanwhile, this form of ownership has resulted in good, relatively stable incomes for the family members who own B-shares, regardless of their affiliation with the enterprises, and dividends have increased in recent years," wrote Gisvold.

He painted a picture of the M7 group as not being interested in running the shipping group.

"There has been no 'lengthy conflict'. For a brief period of time, over the past two or three years, the M7 group has tried to apply pressure on Thomas Wilhelmsen. This has mainly been to get their hands on their share of the capital.

"The conflict described [in the offer] is a construct dreamed up by the M7 group after the most recent generation had taken over the helm, and it is motivated exclusively by their desire to have direct access to the capital, and by nothing else," added Gisvold.

He also denied that there is any form of discrimination based on gender.

Tactical moves?

To the question of whether the offer is a tactical attempt to enhance the price of their own shares, Cathrine Lovenskiold Wilhelmsen responded: "Our offer to Thomas Wilhelmsen and his family, including his mother and sisters, is, of course, serious.

"We believe that today's ownership structure and management model prevent wealth creation in the family's companies as well as in the listed group. After many years of trying to no avail to have our voices heard through a dialogue, our offer is yet another attempt to promote change."

Carnegie's Petter J Hagen reiterated the message. "This is absolutely a serious offer at a price and with a structure that are rational and feasible," he said.

However, the offer does imply that the family's iron hand on the Wilh Wilhelmsen Group may not survive.

Carnegie said its offer suggested a new future ownership structure.

"Following the acquisition, one individual shareholder will no longer control the family-owned companies. This also means that no individual shareholder or group of shareholders will be able to unilaterally dictate the companies' or the owners' agenda.

"All future decisions will require a majority of shareholders, and all decisions will thereby be taken in the light of what best serves the interests of all involved parties," the offer stated.

Family office

However, the conflict is not limited to the listed companies.

Behind closed doors in the Wilhelmsen Group's companies, there are billions in assets that the two factions of the family co-own.

Thomas Wilhelmsen currently owns only some 10% of the shares in Wilh Wilhelmsen Holding. But by controlling the voting rights in the other family members' companies, as well as two charity foundations that bear the family name, he effectively controls more than 50% of the shares in the shipping company, despite the fact that they are owned by the family.

The same applies to the financial dividends from the listed companies.

To control the dividends generated by shipping activities, the Wilhelmsen family established its own family office, Toluma AS. The private company that manages the stream of dividends and gains from the Wilhelmsen Group.

The same ownership structure that gives Thomas Wilhelmsen power over the family members' shares in the shipping company, has also given him full control of the assets in Toluma.

To put it simply, this can be explained by Toluma being a holding company for dividends from the Wilhelmsen Group, before being disbursed to their final owners.

The M7 group believes this is a system that is outside of their control and offers insufficient transparency.

"Today, there is an inappropriate distinction between capital and control, and the majority shareholders have limited ability to gain insight into how funds are managed, what risks are taken and whether internal control systems are adequate," wrote Carnegie.

Attorney Gisvold maintained in his letter on behalf of Thomas Wilhelmsen and his immediate family that the rebels have received plenty of information and that management is transparent as well as professional.

Final impasse

A source familiar with the discussion to resolve the family feud offers an explanation of Thomas Wilhelmsen's situation.

"The family tradition is that assets should be kept together in the hands of the family. That was the responsibility left to Thomas by his father, and that is his duty: To keep all the assets in the family's ownership," the source said.

Currently, however, the female heirs own a far larger share of the assets than that owned by Thomas Wilhelmsen. If he were to buy them out, he would have to put up more money than if the acquisition went in the other direction.

"Thomas is not the one who has created the problem. But he is the one who has to try to resolve it," the source commented.

"Past generations have attached importance to the principle of share and share alike, but within the parameters of the idea that the family's companies should be kept together and continue to operate.

"For that reason, he [Thomas] contends that those being bought out must accept a certain discount or, in actual practice, it would lead to the end of the companies through dissolution."

This discount is supposedly about 50%of their value, in keeping with similar processes in other shipping families. From that perspective, the conflict boils down to a question of the price of the shares to be redeemed.

The source added: "It would be inconceivable for them to continue to own the shipping company together. I think both sides understand that."

This is a translation by Linda Sivesind of an article first published by TradeWinds' sister title Dagens Naeringsliv in Norway. For the original and details of how to subscribe please go to dn.no