American Water and Essential Utilities announce merger to form $63B water and wastewater utility
Key Highlights
- The merger is an all-stock, tax-free transaction with Essential shareholders receiving 0.305 American Water shares per Essential share, representing a 10% premium.
- Post-merger, American Water will own approximately 69% of the combined entity, with Essential shareholders holding about 31%.
- The combined company will serve 4.7 million connections across 17 states and military installations, with a rate base of approximately $29.3 billion.
American Water Works Company, Inc. and Essential Utilities, Inc. have announced plans to merge in an all-stock, tax-free transaction that will create one of the nation’s largest regulated water and wastewater utilities, with a combined enterprise value of approximately $63 billion and a pro forma market capitalization of about $40 billion.
Under the agreement, Essential shareholders will receive 0.305 shares of American Water for each Essential share owned, representing a 10% premium based on 60-day average trading prices. Upon completion, American Water shareholders will own roughly 69% of the combined company, and Essential shareholders will own about 31%.
American Water President and CEO John C. Griffith said, “This combination brings together two industry leaders united by our shared mission to provide safe, clean, reliable and affordable water and wastewater services to our customers.” He added that the merger will enable continued investment in critical infrastructure while maintaining affordable rates and expanding service reach.
Essential Chairman and CEO Christopher H. Franklin said, “Throughout Essential’s nearly 140-year history, we have consistently led with purpose to shape a future rooted in sustainability, innovation, resilience and best-in-class service for our customers.” He noted that the combined company will have “expertise, financial strength and regulatory credibility” to strengthen infrastructure and meet customer needs.
The merged utility will have a rate base of approximately $29.3 billion, serving 4.7 million water and wastewater connections across 17 states and 18 military installations. The company will retain the American Water name and be headquartered in Camden, New Jersey, with operational offices in Bryn Mawr and Pittsburgh, Pennsylvania.
The merger is expected to close by the first quarter of 2027, pending shareholder and regulatory approvals.