American Water Works to Merge With Essential Utilities in All-Stock Deal

The deal is expected to close by the end of the first quarter of 2027. (Dreamstime)

Key Points

• American Water Works and Essential Utilities will merge in an all-stock deal, forming a $40 billion public utility.
• Essential shareholders will receive 0.305 shares of American Water for each share, owning 31% of the combined company.
• The merger is anticipated to conclude by the end of the first quarter of 2027, with John Griffin as CEO.

American Water Works and Essential Utilities announced Monday they plan to merge in an all-stock deal that will result in a combined water-and-wastewater public utility valued at roughly $40 billion.

The combined company will have an enterprise value of approximately $63 billion, based on Friday’s closing prices. It will continue to use the name “American Water,” with operations spanning 17 states, the companies said.

Under the terms of the agreement, Essential shareholders will receive 0.305 shares of American Water for each Essential share they own at the closing of the transaction. Once the merger is completed, American Water shareholders will own roughly 69% of the combined company on a fully diluted basis, while Essential shareholders will own the remaining 31%.

The deal is expected to close by the end of the first quarter of 2027, the companies said.

American Water CEO and President John Griffin described the deal as a union of “two industry leaders united by our shared mission to provide safe, clean, reliable and affordable water and wastewater services to our customers.” Griffin will stay on to serve as chief executive of the combined company.

Shares of American Water fell 1.3% Monday, while Essential Utilities pared earlier gains to trade flat. The benchmark S&P 500 index was up 1%.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com