On Monday, October 27, 2025, American Water Works Company, Inc. (AWK) and Essential Utilities, Inc. (WTRG) announced that each company’s board of directors has unanimously approved a definitive all‑stock, tax‑free merger. The transaction values the combined company at an enterprise value of approximately $63 billion and a pro‑forma market capitalization of about $40 billion. Under the terms, Essential shareholders will receive 0.305 shares of American Water for each share of Essential they own, a 10% premium to the 60‑day average price, resulting in post‑merger ownership of roughly 69% American Water and 31% Essential. The combined entity will serve 4.7 million water and wastewater connections across 17 states with a rate base of approximately $29.3 billion. The merger is expected to close by the end of the first quarter of 2027, pending customary shareholder and regulatory approvals.
The strategic rationale behind the deal is to create the largest regulated water and wastewater utility in the United States, combining American Water’s 14‑state footprint and 14 million customers with Essential’s 5.5 million customers in nine states. The expanded scale is expected to deliver significant cost synergies, enhanced regulatory leverage, and accelerated infrastructure investment, while the geographic diversification reduces exposure to state‑specific regulatory risks. The merger is projected to be accretive to American Water’s earnings per share in the first year after closing, as the combined company will benefit from higher revenue growth and improved operating margins.
Financially, the all‑stock structure preserves capital for both companies and aligns shareholder interests. The exchange ratio and premium reflect the market’s valuation of Essential’s assets and growth prospects. With a combined enterprise value of $63 billion, the transaction represents a substantial expansion of American Water’s balance sheet and market presence, positioning the new entity to pursue further infrastructure projects and potential acquisitions in the regulated utility sector. The deal underscores American Water’s commitment to delivering long‑term value to shareholders through scale, operational efficiency, and disciplined capital deployment.
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