American Water and Essential Utilities to Combine

Acquirer: American Water Works Company, Inc. (NYSE: AWK)

• Provides water and wastewater services in the United States, operating treatment plants, distribution infrastructure, storage facilities, and dams
• Founded in 1886 and headquartered in Camden, NJ

Acquirer Financial Statistics

• Mkt Cap: $26.5 billion
• EV: $41.4 billion
• LTM Revenue: $5.1 billion
• LTM EBITDA: $2.8 billion
• LTM EV / Revenue: 8.1x
• LTM EV / EBITDA: 14.8x

Acquirer Advisor(s)

BofA Securities

Target Company: Essential Utilities, Inc. (NYSE: WTRG)

• Operates regulated utilities that provide water, wastewater, and natural gas services in the United States
• Founded in 1886 and headquartered in Bryn Mawr, PA

Target Financial Statistics

• Mkt Cap: $10.8 billion
• EV: $18.6 billion
• LTM Revenue: $2.3 billion
• LTM EBITDA: $1.3 billion
• LTM EV / Revenue: 8.1x
• LTM EV / EBITDA: 14.3x

Target Advisor(s)

Moelis & Company

Price/Consideration

$40 billion/Stock

Deal Details

Announcement Date

• October 27, 2025

Rationale

• The combined company will have a larger footprint and customer base as well as increased geographic diversity, and be well positioned to deliver operational leverage, better customer service and broader customer reach
• The transaction is expected to be accretive to American Water’s earnings per share in the first year following close, and the combined company expects to maintain American Water’s 7–9% earnings per share and dividend growth targets post close
• Essential owns Peoples Natural Gas, which is growing its rate base at 10% per year, and expects to continue to extend its reach further contributing to the combined company’s ability to drive top- and bottom-line growth
• “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,” said American Water CEO John C. Griffith

Deal Points

• Structured to be an all-stock, tax-free merger with a resulting enterprise value of $63 billion based on closing stock prices as of October 24, 2025
• Essential shareholders will receive 0.305 shares of American Water for each share of Essential they own
• American Water shareholders will own ~69% and Essential shareholders will own ~31% of the combined company on a fully diluted basis
• Management expects no impact on the combined company’s credit rating, and expects ready access to equity markets as the company is a large-cap, regulated utility