American Water Works Company, Inc. and Essential Utilities, Inc. announced this week that each company’s board of directors has unanimously approved a definitive agreement to combine in an all-stock, tax-free merger. The move will position the combined company as a leading regulated water and wastewater utility in the United States.
The combined company, which will continue to be called American Water, will have a pro forma market capitalization of approximately $40 billion and a combined enterprise value of approximately $63 billion, based on closing stock prices as of Oct. 24, 2025.
“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 American Water President and Chief Executive Officer, John C. Griffith. “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. We look forward to bringing together the talented teams of both companies to help solve the many water and wastewater challenges across the country and expand our customer base.”
“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,” added Christopher H. Franklin, chairman and chief executive officer of Essential Utilities, previously known as Aqua America until a name change in 2020. “We are confident that the combined company will build upon our longstanding track record of delivering safe and reliable services and be better positioned to solve today’s challenges while creating a sustainable future. Together, we will have expertise, financial strength and regulatory credibility to continuously improve our infrastructure and meet the evolving needs of our customers. American Water and Essential will continue to enable our communities to thrive.”
Under the terms of the agreement, Essential shareholders will receive 0.305 shares of American Water for each share of Essential they own at the closing of the transaction. This exchange ratio implies a premium of approximately 10% to Essential shareholders based on the average of the daily volume weighted average price of each company’s common stock over the 60-trading-day period ending Oct. 24, 2025.
Upon completion of the merger, American Water shareholders will own approximately 69% and Essential shareholders will own approximately 31% of the combined company on a fully diluted basis.
Griffith will serve as president and chief executive officer and Franklin will serve as executive vice chair of the board of directors of the combined company.
The company will serve approximately 4.7 million water/wastewater connections across 17 states and on 18 military installations. With a larger footprint, customer base and increased geographic diversity, American Water said the combined company will be well positioned to deliver operational leverage, better customer service and broader customer reach.
The combined company will be headquartered in Camden, New Jersey, and Essential’s offices in Bryn Mawr and Pittsburgh, Pennsylvania, will each continue to maintain a strong operational presence long term.
Sources: American Water, Essential Utilities
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