American Water Works Company, Inc. (NYSE: AWK) and Essential Utilities, Inc. (NYSE: WTRG) have announced a definitive agreement to merge in an all-stock, tax-free transaction. The combined company is expected to have a pro forma market capitalization of approximately $40 billion and a combined enterprise value of about $63 billion, based on closing stock prices as of October 24, 2025.
Upon completion of the merger, American Water shareholders will own approximately 69% and Essential shareholders will own approximately 31% of the combined company on a fully diluted basis. The merger is expected to close by the end of the first quarter of 2027, subject to customary closing conditions, including approval from each company’s shareholders and regulatory approvals.
The combined company will serve 4.7 million water and wastewater connections across 17 states, with a combined water and wastewater rate base of approximately $29.3 billion as of the end of 2024, excluding gas rate base of $4.2 billion and including net utility plant not yet included in rate base, pending rate case filings/outcomes. This represents an increase in scale and geographic diversity for the combined entity.
In terms of financial performance, the merger is expected to be accretive to American Water’s earnings per share in the first year following the close of the transaction. Furthermore, the combined company expects to maintain American Water’s 7-9% earnings per share and dividend growth targets post-close.
Upon closing of the transaction, Mr. Griffith will serve as President and Chief Executive Officer of the combined company, and Mr. Franklin will serve as Executive Vice Chair of the Board of Directors of the combined company. The combined company’s 15-member board of directors will include the 10 directors serving on American Water’s board of directors prior to the closing of the transaction and five directors designated by Essential.
In light of the transaction announcement, both companies will not host earnings calls or associated question and answer sessions this quarter. Both companies expect to resume their typical earnings conference calls in 2026.
The combined company will be headquartered in Camden, New Jersey, and Essential’s Bryn Mawr and Pittsburgh offices will each continue to maintain a strong operational presence long term. The combined company will continue to use the name “American Water.”
American Water expects to release its financial results for the third quarter of 2025 after the market closes on October 29, 2025, while Essential expects to release its financial results for the third quarter of 2025 following the market close on November 4, 2025.
Upon closing of the transaction, American Water plans to conduct a review of strategic alternatives for its non-water and non-wastewater businesses. No assurance can be given that any transaction or other strategic outcomes would result from the review.
The market has reacted to these announcements by moving the company's shares -0.22% to a price of $41.21. For more information, read the company's full 8-K submission here.
