American Water and Essential Utilities announce $63B merger to form nation’s largest water utility
Key Highlights
- The merger will create the largest regulated water and wastewater utility in the U.S., with a combined enterprise value of approximately $63 billion.
- Essential shareholders will receive 0.305 American Water shares per Essential share, representing about a 10% premium.
- Post-merger, American Water will hold 69% and Essential 31% of the combined company, which will keep the American Water name and headquarters in Camden, NJ.
American Water Works Company Inc. and Essential Utilities Inc. have announced plans to merge in an all-stock, tax-free transaction that will create the largest regulated water and wastewater utility in the U.S., 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 share of Essential, representing roughly a 10% premium. Following the merger, American Water shareholders will own 69% and Essential shareholders will own 31% of the combined company, which will retain the American Water name and remain headquartered in Camden, New Jersey.
“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,” said John C. Griffith, president and CEO of American Water, in a press release. “By joining forces with Essential, the combined company’s enhanced scale and operational efficiency will support continued investment in our critical infrastructure.”
Christopher H. Franklin, chairman and CEO of Essential, 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. We are confident that the combined company will build upon our longstanding track record of delivering safe and reliable services.”
The merger will unite two major regulated utilities, encompassing approximately 4.7 million water and wastewater connections across 17 states and 18 military installations. The combined company will also include Essential’s Peoples Natural Gas operations, serving roughly 746,000 customers in Pennsylvania and Kentucky.
American Water expects to maintain its 8–9% long-term rate base growth target and 7–9% earnings and dividend growth goals post-merger. Company leaders said no customer rate changes or material employee benefit changes are expected as a result of the transaction.
The merger is subject to shareholder and regulatory approvals, with closing anticipated by the end of the first quarter of 2027.