American Water Works and Essential Utilities will merge in an all-stock transaction valued at about $40 billion. The deal will create one of the largest regulated water and wastewater utilities in the United States.
The combined company will operate under the name American Water. It will have about 4.7 million water and wastewater connections across 17 states and 18 military installations. The enterprise value of the combined company is estimated at $63 billion.
Essential shareholders will receive 0.305 shares of American Water for each share they hold. American Water shareholders will own about 69 percent of the new company, and Essential shareholders will own about 31 percent. The exchange ratio represents a 10 percent premium for Essential shareholders based on recent 60-day average prices.
John C. Griffith, president and chief executive of American Water, will lead the combined company. Christopher H. Franklin, chairman and chief executive of Essential, will become executive vice chair of the board. The new 15-member board will include ten directors from American Water and five from Essential.
The headquarters will remain in Camden, New Jersey. Essential’s Bryn Mawr and Pittsburgh offices will continue operations. The merger is expected to close by the end of the first quarter of 2027, subject to shareholder and regulatory approvals.