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NGS Flatrock Deal: Growth at a 6.2x Multiple
NGS acquires Flatrock Compression at 6.2x EBITDA, adding scale in gas compression. The deal is accretive. Integration risk remains.
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Natural Gas Services Group (NGS) said Monday it will acquire Flatrock Compression, a deal that adds scale in gas compression services at a 6.2x EBITDA multiple. The acquisition is accretive, the company said, and fuels the growth trajectory NGS has shown over recent years.
The deal consolidates a fragmented market for gas compression equipment and services. NGS, which rents and sells compressors used to move natural gas from wells to pipelines, gains a larger fleet and a broader customer base. The Flatrock acquisition follows a pattern of consolidation in the sector, where smaller operators combine to compete with larger players like Exterran and Archrock.
NGS did not disclose the purchase price or how it financed the deal. If the company used stock, existing shareholders face dilution. If it used debt, the balance sheet carries more leverage. The 6.2x multiple is below the typical 7-8x range for similar transactions, suggesting NGS negotiated a favorable price or that Flatrock had some operational issues.