American Water Works Company (NYSE:AWK) shares fell 3.2% on Monday after the utility giant unveiled plans for an all-stock merger with Essential Utilities (NYSE:WTRG), whose stock slipped 1% following the news.
The two companies announced a tax-free merger that would form a leading regulated water and wastewater utility in the U.S., with a pro forma market capitalization of roughly $40 billion and a combined enterprise value of about $63 billion, based on closing stock prices from October 24, 2025.
Under the agreement’s terms, Essential shareholders will receive 0.305 shares of American Water for each Essential share they own—representing a premium of around 10% based on the 60-day volume-weighted average price ending October 24, 2025. After the merger closes, American Water shareholders will own approximately 69% of the combined entity, while Essential shareholders will hold 31%.
The new utility would have a water and wastewater rate base of around $29.3 billion as of the end of 2024, serving an estimated 4.7 million connections across 17 states and 18 military installations. The deal is expected to be accretive to American Water’s EPS in the first year after completion.
John C. Griffith, President and CEO of American Water, will lead the merged company. Essential’s Chairman and CEO Christopher H. Franklin will serve as Executive Vice Chair of the board and executive sponsor of the integration task force.
The companies reaffirmed their target of 7–9% annual EPS and dividend growth after the merger, which is expected to close by the end of Q1 2027, subject to shareholder and regulatory approvals.
The combined company will be headquartered in Camden, New Jersey, while maintaining operational hubs in Essential’s Bryn Mawr and Pittsburgh offices.