American Water, Essential Utilities Merge as Top U.S. Water Utility

American Water Works Company, Inc. and Essential Utilities, Inc. have announced a major merger approval. This all-stock, tax-free merger will create a leading regulated U.S. water and wastewater utility. The combined entity will have a market capitalization of roughly $40 billion and an enterprise value of about $63 billion based on stock prices from October 24, 2025.

Details of the Merger

The merger was unanimously approved by the boards of both companies. John C. Griffith, CEO of American Water, expressed confidence that this union will enhance service delivery and operational efficiency. Griffith emphasized a shared mission to provide safe, clean, and affordable water and wastewater services.

Christopher H. Franklin, CEO of Essential Utilities, noted that the merger will allow the companies to leverage their expertise in sustainability and innovation. The collaboration aims to efficiently address current water challenges and improve community support.

Shareholder Exchange Ratios

Under the merger terms, Essential Utilities shareholders will receive 0.305 shares of American Water for each Essential share they own. This represents a premium of around 10% based on stock performance leading up to the agreement.

• American Water shareholders will hold 69% of the combined company.
• Essential shareholders will own approximately 31% post-merger.

Impacts on the Combined Entity

The merger is projected to offer substantial benefits to various stakeholders. The new organization will uphold commitments to water quality and sustainability, with no immediate changes to customer rates anticipated.

• The combined utility aims for an 8-9% long-term rate base growth.
• Investment will focus on infrastructure renewal and technology development.

Community and Employee Benefits

The merged company is committed to supporting local communities and maintaining affordable water service. Furthermore, it aims to enhance employment opportunities without altering current compensation or benefits structures.

Future Prospects

The merger is seen as a strategic move to enhance service delivery across a broader geographic area. The combined company is expected to thrive with approximately 4.7 million combined water and wastewater connections across 17 states.

American Water maintains a strong projection for earnings and dividend growth, targeting a 7-9% growth rate post-merger. The transaction is anticipated to finalize by the end of the first quarter of 2027, pending regulatory approvals.

Executive Leadership Structure

The headquarters will be based in Camden, New Jersey, ensuring continuity in operations. The strong operational presence of Essential will be maintained in Bryn Mawr and Pittsburgh.

This transformative merger is anticipated to enable American Water and Essential Utilities to address ongoing water challenges and reinforce their roles as leading utilities in the United States.