Kodiak Gas Services, Inc. (NYSE: KGS) announced it has entered into a definitive agreement to acquire Distributed Power Solutions, LLC (DPS) in a transaction valued at approximately $675 million, marking a strategic expansion beyond traditional contract compression into the rapidly growing distributed power market. The acquisition, which includes $575 million in cash and roughly $100 million in Kodiak equity, is expected to close in early April 2026, subject to regulatory approvals and customary conditions.
DPS is a leading provider of turnkey, scalable, and highly reliable distributed power solutions, serving customers across energy, industrial, and digital infrastructure end markets. Its fleet includes approximately 384 megawatts of modern generation capacity powered by Caterpillar reciprocating engines and turbines, positioning it as a premium platform in a market increasingly constrained by grid limitations.
The strategic rationale for the deal centers on strong operational and commercial synergies. Kodiak brings deep expertise in operating and maintaining large-horsepower equipment, supported by more than 700 Caterpillar-certified technicians, advanced fleet monitoring systems, and embedded maintenance processes. Management expects these capabilities to enhance the reliability and uptime of DPS’s generation assets while supporting future fleet expansion.
Financially, the acquisition is expected to be immediately accretive to earnings and discretionary cash flow per share. The transaction values DPS at approximately 7.4x estimated 2026 adjusted EBITDA, a compelling multiple given the business’s contracted revenue profile and exposure to high-growth end markets. Notably, DPS has secured long-term contracts, including roughly 100 megawatts serving a large data center operator with demonstrated 99.9% reliability for over a year.
The deal also expands Kodiak’s customer reach. While the company has historically focused on upstream and midstream oil and gas customers, DPS adds exposure to digital infrastructure clients, including data centers increasingly adopting “bring-your-own-power” solutions. With power grid constraints intensifying and data center demand accelerating, distributed power is emerging as a primary, long-term energy solution rather than a temporary backup option.
Kodiak President and CEO Mickey McKee described distributed power as a natural extension of the company’s core competencies, noting that the acquisition enhances Kodiak’s ability to deliver critical energy infrastructure while opening new avenues for growth. DPS President Scott Milligan echoed that sentiment, highlighting the cultural alignment between the two companies and the opportunity to scale DPS’s high-quality fleet on a larger operational platform.
From a strategic perspective, the transaction positions Kodiak at the intersection of energy reliability and digital growth. As data centers, industrial users, and energy customers seek faster deployment and greater control over power supply, the combined Kodiak-DPS platform is well positioned to meet rising demand.
With an experienced management team joining Kodiak and a strong backlog of contracted cash flows, the acquisition represents a meaningful step in Kodiak’s evolution from a pure-play compression provider into a broader provider of mission-critical energy infrastructure solutions.
