How the Balmoral Comtec deal was completed

Balmoral Group

Balmoral Comtec was one of the most successful independent Scottish companies and its acquisition by Freudenberg Flow Technologies had to overcome significant national security obstacles before completion.

The deal, which completed on May 19, was called in for review under the National Security and Investment Act 2021, legislation introduced to give ministers the power to scrutinise and, if necessary, block acquisitions of British businesses on national security grounds.

For Ewen Lowrie, corporate managing associate at Freeths and one of the lead lawyers on the transaction, it was the first time in his career a deal he had worked on had been formally called in.

"It is vital that if you have a notifiable transaction under the NSI Act, that is dealt with at the very outset to manage client expectations," Ewen said. "It is a very involved process if it is called in."

The call-in came around November last year, roughly six months into a process that had begun in earnest the previous summer.

The Investment Security Unit, the government body responsible for administering the regime, focused its attention on the intellectual property underpinning Balmoral Comtec's product range, and specifically on the syntactic foam components of its engineered buoyancy and subsea protection systems.

The concern, broadly, was about what would happen to that IP and know-how if a global conglomerate headquartered in Germany chose to reorganise and/or transfer assets post-completion.

Conditional clearance came on May 5 and Freudenberg is now required to notify the government ahead of any restructuring involving Balmoral Comtec's assets or UK-registered intellectual property, and must adhere to specific cybersecurity standards.

Deal completion followed on May 19, a fortnight after clearance landed, by which point the deal team had spent months ensuring everything else was ready to execute.

"We were 95 per cent or more of the way there," Ewen said.

"As ever, there were eleventh-hour things to sort out from a commercial perspective, but we had been working on it quite steadily over the past twelve months."

Freeths acted for Freudenberg, the buyer, a family-owned German industrial group with €11.7bn in revenues, operations in around 60 countries and a history stretching back 177 years.

Ewen led the transaction from the firm's Glasgow office alongside corporate partner Martin Smith.

The Freeths team spanned multiple practice areas, with competition partner Andrew Maxwell and managing associate Emma Lythgoe carrying the NSI and competition workstreams. Nick Taylor and Barry Richards handled Scottish and English real estate matters respectively.

Blackwood Partners in Aberdeen acted for Balmoral.

Balmoral Comtec was in robust financial health with most recent accounts showing turnover rising 85 per cent to £142m in the year to March 2025, with pre-tax profit increasing to £34.4m from £8.4m the previous year.

The business had expanded its workforce to 388 from 305 and invested heavily in R&D, including a wave and current simulation facility capable of replicating surface, subsea and seabed conditions for offshore wind and subsea product testing.

Founded in 1980 with four employees, it had grown into a business that generated around 70 per cent of Balmoral Group's total revenues of £202m and delivered more than 4,500 projects, roughly 80 per cent of them international.

Freudenberg took a long view on valuation rather than anchoring solely to a single exceptional year.

"They took a view looking back several years as to what revenues had been for the business," Ewen said.

"The North Sea has had its boom, its decline, and it is now something of a promising transition phase. That was all thoroughly conducted through financial, technical and legal due diligence."

The carve-out from Balmoral Group was relatively clean, a share acquisition of Balmoral Comtec from Balmoral Holdings, which held 98 per cent of the shares alongside two trusts holding the remainder.

Some property required transfer or leasing depending on what Freudenberg needed post-acquisition, but the corporate structure presented no significant complications.

Sir Jim Milne retains Balmoral Tanks, Blaze Manufacturing Solutions, Balmoral Business Park and the Marcliffe hotel.

For Freeths, and its Scottish team in particular, the deal is a landmark moment.

The firm's Glasgow office opened in May 2023, initially with two real estate partners, and has grown to around 25 staff.

Its corporate offering in Scotland is roughly 18 months old following Ewen’s relocation from the London office of the firm and this is the largest Scottish corporate mandate it has completed to date. The firm recently added corporate partner Louise Mahon from MFMac to head up the team and build further capacity.

Ewen believes the NSI Act will become an increasingly familiar feature of Scottish dealmaking.

"I suspect there will be more and more instances of deals being called in as the ISU team increase their expertise across the various sectors that require notification."

For cross-border transactions involving Scottish energy assets, subsea technology, offshore wind supply chain, North Sea infrastructure, that learning curve now sits at the centre of every deal timetable.

Freeths targets Scottish market growth after landmark Aberdeen deal

The completion of the Balmoral Comtec transaction marks a moment of strategic significance for Freeths beyond the deal itself, it signals the firm's ambition to compete for high-profile Scottish corporate mandates from a standing start.

The Glasgow office opened in May 2023, initially focused on real estate but soon adding various specialist teams as it gears towards a full-practice offering in Scotland.

A corporate capability followed around 18 months ago, led by managing associate Ewen Lowrie following his move from the firm's London team.

The office has since grown to approximately 25 staff. Corporate partner Louise Mahon, who recently joined from MFMac, adds further senior capacity.

"Our strategy in Scotland is to be getting big-ticket, high-profile transactions as our core practice area," Ewen said.

"That being said, we recognise we are only 18 months into having the corporate offering in Scotland, so we have various smaller transactions on as well, a few management buyouts, but both myself and Louise are keen to target big acquisitions, whether buy-side, sell-side or private equity investment deals."

The firm operates as a full-service practice nationally, with specialisms in Glasgow spanning corporate, real estate, banking, dispute resolution and projects, with expertise in other areas (such as competition) drawn from the wider Freeths network across 13 UK offices.

Five things to know about the Balmoral Comtec deal

Called in under the NSI Act

The deal was formally reviewed by the UK government's Investment Security Unit, with scrutiny focused on the intellectual property behind Balmoral Comtec's syntactic foam product components. Conditional clearance came on 5 May, with Freudenberg required to notify the government of any post-completion reorganisation affecting UK-registered IP or assets.

Twelve months in the making

The process began in summer 2025 with an extensive due diligence programme before the NSI call-in added further complexity. The deal team spent the intervening months negotiating in parallel so they were ready to execute within a fortnight of clearance.

A business at peak performance

Balmoral Comtec posted turnover of £142m in the year to March 2025, up 85 per cent year-on-year, with pre-tax profit rising to £34.4m from £8.4m. Freudenberg nonetheless valued the business against a multi-year revenue view, conscious of the North Sea's cyclical history.

A clean carve-out

Despite being the primary revenue generator of Balmoral Group, accounting for around 70 per cent of the group's £202m turnover, the legal structure was relatively straightforward, a share acquisition from Balmoral Holdings with some property transfer required. Sir Jim Milne retains Balmoral Tanks, Blaze, Balmoral Business Park and the Marcliffe.

A landmark for Freeths in Scotland

Acting for Freudenberg is the largest Scottish corporate deal the firm has completed since opening its Glasgow office in 2023. With a corporate team now backed by the recent hire of partner Louise Mahon, the firm is positioning itself as a serious player in the Scottish M&A market.