American Water Works and Essential Utilities Merge to Create $40 Billion Utility Company
American Water Works and Essential Utilities have agreed to merge in an all-stock deal worth approximately $63 billion, including debt. The combined entity will be a leading regulated water and wastewater public utility with a market capitalization of around $40 billion.
Key Highlights of the Merger
- Combined Company Details: The new company, named American Water, will serve 4.7 million connections across 17 states, with a strong presence in New Jersey, Pennsylvania, Illinois, Texas, North Carolina, and Ohio.
- Enhanced Scale and Efficiency: The merger is expected to bring enhanced scale and operational efficiency, supporting continued investment in critical infrastructure and expansion.
- Leadership Structure: American Water CEO John Griffith will lead the combined company, while Essential Utilities CEO Christopher Franklin will serve as executive vice chair of the board.
- Shareholder Ownership: American Water shareholders will own approximately 69% of the combined company, while Essential stockholders will own around 31%.
- Regulatory Approvals: The transaction is expected to close by the end of the first quarter of 2027, pending regulatory approvals.
Benefits of the Merger
The merger is expected to bring several benefits, including ¹:
- Increased Scale: The combined company will have a water and wastewater rate base of approximately $29.3 billion, making it one of the largest water utilities in the country.
- Improved Efficiency: The merger is expected to drive operational efficiency and support continued investment in critical infrastructure.
- Enhanced Service: The combined company will have the resources and expertise to deliver best-in-class service to its customers.
About the Companies
- American Water Works: American Water is a leading regulated water and wastewater utility company, serving over 14 million people in 14 states and on 18 military installations.
- Essential Utilities: Essential Utilities is a regulated utility company that provides water and wastewater services to customers in several states, including Pennsylvania, Texas, and Ohio
American Water Works and Essential Utilities have agreed to merge in an all-stock deal worth approximately $63 billion, including debt. The combined entity will be a leading regulated water and wastewater public utility with a market capitalization of around $40 billion.
Merger Details
- Combined Company: The new company, named American Water, will serve 4.7 million connections across 17 states, with a strong presence in New Jersey, Pennsylvania, Illinois, Texas, North Carolina, and Ohio.
- Exchange Ratio: Essential shareholders will receive 0.305 shares of American Water for each share of Essential they own at the closing of the transaction.
- Ownership Structure: American Water shareholders will own approximately 69% of the combined company, while Essential stockholders will own around 31%.
- Leadership: American Water CEO John Griffith will lead the combined company, while Essential CEO Christopher Franklin will serve as executive vice chair of the board.
Benefits of the Merger
- Enhanced Scale and Efficiency: The merger is expected to bring enhanced scale and operational efficiency, supporting continued investment in critical infrastructure and expansion.
- Increased Rate Base: The combined company will have a water and wastewater rate base of approximately $29.3 billion, making it one of the largest water utilities in the country.
- Improved Credit Quality: The combined company will have a strong balance sheet and credit profile, benefiting from diversified service territories and regulatory exposure.
Financial Performance
- Market Capitalization: The combined company will have a market capitalization of around $40 billion.
- Enterprise Value: The combined enterprise value will be approximately $63 billion, based on closing stock prices as of October 24, 2025.
- Earnings Per Share (EPS) Growth: The combined company expects to maintain American Water’s long-term EPS growth target of 7-9%.
Stock Information
- American Water Works Stock Price: The current stock price of American Water Works Co Inc (AWK) is $137.02, with a market capitalization of $29.13 billion.
- Stock Exchange Listings: American Water Works is listed on the New York Stock Exchange (NYSE) under the ticker symbol AWK, as well as on other international exchanges, including the London Stock Exchange (0HEW.L) and the Mexican Stock Exchange (AWK.MX).
Regulatory Approvals
- Closing Conditions: The transaction is expected to close by the end of the first quarter of 2027, subject to customary closing conditions, including shareholder approvals and regulatory clearances.
- Regulatory Bodies: The merger will require approvals from various regulatory bodies, including public utility commissions and antitrust authorities.
About the Companies
- American Water Works: American Water is a leading regulated water and wastewater utility company, serving over 14 million people in 14 states and on 18 military installations.
- Essential Utilities: Essential Utilities is a regulated utility company that provides water and wastewater services to customers in several states, including Pennsylvania, Texas, and Ohio
