American Water Works Company, Inc. and Essential Utilities, Inc. have unveiled plans for an all-stock, tax-free merger, forming a robust player in the U.S. water and wastewater utility sector. This strategic agreement, recently approved by both companies’ boards of directors, will create an enterprise with an estimated market capitalization of around $40 billion. Based on stock prices as of October 24, 2025, the merger is projected to yield a combined value of approximately $63 billion.
John C. Griffith, President and CEO of American Water, expressed enthusiasm for the merger, stating it combines two leaders in the industry with a shared commitment to providing safe, clean, and affordable water services. He emphasized that the new entity will enhance operational efficiencies and increase investment in critical infrastructure, promising ongoing superior service for customers.
Christopher H. Franklin, Chairman and CEO of Essential, echoed these sentiments, noting the combined firm would leverage the strengths of both organizations, particularly in sustainable practices and innovation. He expressed confidence that the new structure will not only maintain but elevate service levels and community support across their respective service areas.
As per the merger terms, Essential shareholders will exchange their shares for shares of American Water at a ratio of 0.305. This exchange represents a roughly 10% premium based on each company’s stock performance over a recent 60-day trading period. Once the merger finalizes, American Water’s shareholders will hold about 69% of the new company, while Essential’s shareholders will have approximately 31%.
The merger promises significant benefits to stakeholders and aims to uphold the commitment to deliver essential utility services effectively. The new company plans to invest heavily in its infrastructure, aiming for a long-term growth rate in capital investments of 8-9%. This dedication to maintaining and improving service quality without increasing customer rates is a key selling point of the merger.
The combination is set to create a formidable utility that will serve around 4.7 million customers across 17 states, bolstering its employee base and enabling long-term career development for staff. The business will continue honoring existing union contracts, ensuring stability for its workforce.
Leadership roles in the future organization have been clearly defined. Upon completion of the merger, Griffith will serve as the CEO, while Franklin will take on the role of Executive Vice Chair. The board will consist of members from both companies, with American Water’s board maintaining a strong presence post-merger.
The merger is expected to close by the end of the first quarter of 2027, pending shareholder, regulatory, and customary approvals. The combined enterprises’ headquarters will be in Camden, New Jersey, while retaining operational offices in Bryn Mawr and Pittsburgh.
These developments highlight a confident move toward a more sustainable and customer-focused utility entity, poised for future challenges and growth. With an emphasis on community engagement and environmental stewardship, the merger promises to enhance service delivery across the regions it will serve, thereby contributing positively to the quality of life of millions.