American Water and Essential Utilities to Merge in $40 Billion Deal

American Water Works and Essential Utilities announced their decision to merge in an all-stock transaction valued at approximately $40 billion. The new entity, which will operate under the name American Water, aims to enhance its service capabilities by consolidating operations that will connect around 4.7 million water customers across 17 states and 18 military installations ranging from Hawaii to Pennsylvania.

Under the terms of the agreement, Essential shareholders will receive 0.305 shares of American Water for each share they currently own. Upon completion of the merger, American Water shareholders will hold about 69% of the combined company, while Essential shareholders will own approximately 31%. Importantly, the merger will not lead to changes in customer rates.

American Water has indicated plans to assess strategic options for its non-water and non-wastewater businesses following the merger’s completion. The company does not anticipate significant alterations to employee compensation or benefits as a result of this consolidation. All existing union contracts will remain in effect according to their current terms.

John Griffith, the CEO of American Water, will retain his position as president and CEO of the merged organization. Meanwhile, Christopher Franklin, chairman and CEO of Essential, is set to take on the role of executive vice chair for the board. The board of the new company will comprise 15 members, including the 10 directors from American Water’s board prior to the merger and five directors designated by Essential.

Operational Continuity and Future Plans

Headquartered in Camden, NJ, where American Water is currently based, the merged company will maintain a strong operational presence in both Bryn Mawr and Pittsburgh, where Essential has offices. The merger is expected to close by the end of the first quarter of 2027, pending approval from shareholders of both companies and necessary endorsements from applicable public utility commissions.

In a statement regarding the merger, Griffith emphasized the potential benefits: “By joining forces with Essential, the combined company’s enhanced scale and operational efficiency will support continued investment in our critical infrastructure, enabling us to continue providing superior customer service at affordable rates.”

This merger marks a significant move in the public utility sector, potentially transforming the landscape of water service in the United States as both companies aim to leverage their combined strengths to improve infrastructure and service delivery.