American Water and Essential Utilities to merge in $40 billion deal

American Water Works Company, Inc. (NYSE: AWK) and Essential Utilities, Inc. (NYSE: WTRG) announced their boards have unanimously approved a definitive agreement to combine in an all-stock, tax-free merger. The combined entity would have a pro forma market capitalization of approximately $40 billion and an enterprise value of approximately $63 billion, based on closing stock prices as of October 24, 2025.

Under the merger terms, Essential shareholders will receive 0.305 shares of American Water for each share of Essential they own at closing. This exchange ratio represents approximately a 10% premium to Essential shareholders based on the 60-trading-day volume weighted average price ending October 24, 2025. Upon completion, American Water shareholders will own approximately 69% and Essential shareholders will own approximately 31% of the combined company on a fully diluted basis.

The merged company would serve 4.7 million water and wastewater connections across 17 states with a combined water and wastewater rate base of approximately $29.3 billion. The transaction is expected to be accretive to American Water's earnings per share in the first year following close, and the combined company expects to maintain American Water's 7-9% earnings per share and dividend growth targets.

John C. Griffith, American Water's President and CEO, will lead the combined company, while Christopher H. Franklin, Essential's Chairman and CEO, will serve as Executive Vice Chair. The combined company will be headquartered in Camden, New Jersey, and will continue using the name "American Water."

The transaction requires approval from each company's shareholders, Hart-Scott-Rodino Act clearance, and regulatory approvals including from applicable public utility commissions. The companies expect the transaction to close by the end of the first quarter of 2027.

American Water plans to review strategic alternatives for its non-water and non-wastewater businesses upon closing, though no assurance can be given regarding any outcomes from this review.

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