American Water Works Company, Inc. and Essential Utilities, Inc. have agreed to merge in an all-stock, tax-free transaction that will create one of the largest regulated water and wastewater utilities in the United States. The combined enterprise will have an estimated value of $63 billion and a market capitalization of about $40 billion, based on October 24 closing stock prices.
Under the terms of the agreement, Essential shareholders will receive 0.305 shares of American Water for each share they own, representing a 10% premium based on the 60-day average stock prices. Following completion, American Water shareholders will hold roughly 69% of the combined company, with Essential shareholders owning 31%.
The merger brings together two of the country’s major regulated utilities, serving approximately 4.7 million water and wastewater connections across 17 states and 18 military installations. The combined company will also include Peoples Natural Gas, serving about 746,000 customers in Pennsylvania and Kentucky.
American Water said it will also review strategic options for its non-water and wastewater businesses after the merger is finalized
The companies said the merger would support continued investment in infrastructure, water quality, and technology, while maintaining affordable customer rates. American Water expects to sustain its long-term rate base growth target of 8–9% and earnings-per-share and dividend growth targets of 7–9% following the merger.
John C. Griffith, President and CEO of American Water, will lead the combined company, while Essential’s CEO, Christopher H. Franklin, will become Executive Vice Chair of the board. The new company will be headquartered in Camden, New Jersey, and operate under the American Water name, with Essential’s offices in Bryn Mawr and Pittsburgh retaining operational roles.
The transaction is subject to shareholder and regulatory approvals, including review under the Hart-Scott-Rodino Act and by state utility commissions. Closing is expected by the end of the first quarter of 2027.
American Water said it will also review strategic options for its non-water and wastewater businesses after the merger is finalized.
