American Water Works Company and Essential Utilities announced a definitive agreement to merge in an all-stock and tax-free transaction that will create the largest regulated water and wastewater utility in the United States. The combined company will serve approximately 4.7 million water and wastewater connections across 17 states, with a combined rate base of about $29.3 billion and a market capitalization of roughly $40 billion. Based on closing stock prices as of October 24, 2025, the merger implies a combined enterprise value of approximately $63 billion.
Both boards of directors have unanimously approved the merger, which is expected to close by the end of the first quarter of 2027, subject to shareholder and regulatory approvals. The transaction will unite two industry leaders that share a commitment to safe, reliable, and affordable utility services while enhancing scale, operational efficiency, and customer reach.
Under the agreement, Essential shareholders will receive 0.305 shares of American Water for each share of Essential stock owned at closing. This exchange ratio represents a 10% premium based on the average volume-weighted share prices of both companies over the 60 trading days ending October 24, 2025. Following the completion of the merger, American Water shareholders will own approximately 69% of the combined entity, while Essential shareholders will own 31%.
The merger will expand the companies’ ability to deliver water and wastewater services while maintaining their long-term commitment to customers, employees, and local communities. Together, the combined utility will operate in 17 states and on 18 military installations, providing critical infrastructure to more than 2,000 communities. The merged entity will maintain American Water’s existing long-term earnings per share and dividend growth targets of 7% to 9%, with the transaction expected to be accretive to American Water’s earnings in the first year after closing.
American Water will remain headquartered in Camden, New Jersey, while Essential’s Bryn Mawr and Pittsburgh offices will continue to serve as major operational centers. The merger also strengthens the combined company’s financial position by broadening its geographic reach and regulatory base, thereby enhancing resilience and access to equity markets without requiring new debt issuance.
As part of the merger, the companies announced the leadership structure of the new organization. John C. Griffith, President and Chief Executive Officer of American Water, will serve as CEO of the combined company. Christopher H. Franklin, Chairman and CEO of Essential Utilities, will become Executive Vice Chair of the board and executive sponsor of the integration task force. David Bowler will continue as Executive Vice President and Chief Financial Officer of American Water, and Daniel Schuller, Executive Vice President and CFO of Essential, will assume the role of Executive Vice President and Chief Strategy Officer. The combined board will include 15 members, with 10 from American Water and five from Essential, and Karl Kurz will continue as independent Chair of the board.
American Water and Essential emphasized their shared commitment to employees, stating that no material changes to compensation or benefits are anticipated, and all union agreements will continue under current terms. Both companies also reaffirmed their dedication to community engagement and charitable giving, noting that customer rates will remain unchanged following the transaction.
Advisors/counsel: Advisors for the transaction include BofA Securities as exclusive financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP as legal counsel to American Water. Moelis & Company LLC served as exclusive financial advisor to Essential Utilities, with Gibson, Dunn & Crutcher LLP as legal counsel. Strategic communications support was provided by Joele Frank, Wilkinson Brimmer Katcher.
KEY QUOTES:
“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. By joining forces with Essential, the combined company’s enhanced scale and operational efficiency will support continued investment in our critical infrastructure, enabling us to continue providing superior customer service at affordable rates. We look forward to bringing together the talented teams of both companies to help solve the many water and wastewater challenges across the country and expand our customer base.”
John C. Griffith, President and Chief Executive Officer, American Water
“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. We are confident that the combined company will build upon our longstanding track record of delivering safe and reliable services and be better positioned to solve today’s challenges while creating a sustainable future. Together, we will have expertise, financial strength and regulatory credibility to continuously improve our infrastructure and meet the evolving needs of our customers. American Water and Essential will continue to enable our communities to thrive.”
Christopher H. Franklin, Chairman and Chief Executive Officer, Essential Utilities
