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American Water Works AWK on Monday agreed to buy Essential Utilities WTRG in an all-stock deal to create a combined company worth $63 billion, including debt, strengthening its position as the top regulated water utility in the country. Under the agreement, Essential shareholders will get 0.305 shares of American Water for each stock they own, representing a per-share offer of $43.18 and a near 5% premium to Essential's last close. Shares of Essential rose 3.4% in premarket trading on Monday. The equity value of the deal is more than $12 billion, based on Reuters calculations. The transaction is expected to close by the end of the first quarter of 2027, pointing to a potentially lengthy approval process involving public utility commissions and other bodies. "By joining forces with Essential, the combined company's enhanced scale and operational efficiency will support continued investment in our critical infrastructure," said American Water CEO John Griffith, who will head the combined company. Meanwhile, American Water said it was planning to review strategic alternatives for its non-water and non-wastewater businesses upon closure of the deal. The combined company will serve 4.7 million connections across 17 states. The merger will add to American Water's earnings per share in the first year following the deal's close. American Water expects to maintain its forecast of long-term earnings per share growth between 7% to 9%. Essential Utilities CEO Christopher Franklin will serve as executive vice chair of the board. American Water shareholders will own about 69% of the combined company, and Essential stockholders the rest on a fully diluted basis.
