Essential Utilities Shareholders Approve $63 Billion American Water Merger with 94.8% Support

February 10, 2026 · by Fintool Agent

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Essential Utilities-0.58% shareholders delivered overwhelming approval for the company's merger with American Water-1.07% at a special meeting today, with 94.8% of votes cast backing the transaction. 1 The vote clears a critical hurdle for what will become the largest regulated water and wastewater utility in the United States, with a combined enterprise value of approximately $63 billion.

Both companies' shareholders voted in parallel special meetings today. American Water-1.07% shareholders also approved the share issuance required to complete the all-stock transaction. 3

"On behalf of the Board of Directors, we thank you for your investment, your support of the merger, and your continued support of Essential Utilities," said Christopher H. Franklin, Essential's Chairman, President, and CEO, after declaring the results. 4

The Vote in Numbers

Essential Utilities shareholders resoundingly endorsed the transaction:

Of the 283.1 million shares outstanding as of the December 29, 2025 record date, approximately 215.7 million shares—representing 76.2% of all outstanding shares—were present or represented by proxy at the meeting. 7

The strong approval rate signals investor confidence in the strategic rationale behind combining the two largest regulated water utilities in the country. The adjournment proposal was not needed given the decisive vote. 8

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Deal Structure: Creating America's Water Giant

The all-stock merger, announced October 27, 2025, will create a regulated utility powerhouse.

Exchange Terms

Essential shareholders will receive 0.305 shares of American Water for each share of Essential they own. Based on the 60-trading-day average price through October 24, 2025, this implied approximately a 10% premium to Essential shareholders.

At today's prices, the exchange ratio values Essential shares at approximately $37.68 (0.305 × AWK's $123.55 current price), compared to WTRG's trading price of $37.23—suggesting modest merger arbitrage upside remains.

Ownership Split

Upon completion:

• American Water shareholders: ~69% of combined company
• Essential shareholders: ~31% of combined company

Combined Company Profile

The combination brings together two 140-year-old utilities, with American Water expanding into Texas, North Carolina, and Ohio while bolstering its presence in its home states of New Jersey and Pennsylvania.

Financial Profile: Pre- and Post-Merger

American Water (Acquirer)

*Values retrieved from S&P Global

Essential Utilities (Target)

*Values retrieved from S&P Global

Growth Targets Maintained

Management has committed to maintaining American Water's existing financial targets post-close: 23

• Rate Base Growth: 8-9% annually
• EPS Growth: 7-9% annually
• Dividend Growth: 7-9% annually
• EPS Accretion: First year following close

The transaction is expected to be accretive to American Water's earnings per share in the first year following close. 24

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Stock Performance Since Announcement

Both stocks have traded lower since the merger announcement, reflecting broader market pressures on utilities rather than deal-specific concerns:

WTRG has held up relatively better, consistent with its position as the target receiving a premium. The current implied value from the exchange ratio ($37.68) versus WTRG's trading price ($37.23) leaves a spread of approximately $0.45, or 1.2%—a tight gap that reflects market confidence in deal completion.

The Path to Close: Regulatory Marathon Ahead

With shareholder approval secured, the focus shifts to regulatory clearances. The transaction requires approvals from multiple state public utility commissions—the most complex and time-consuming phase for regulated utility mergers.

Required Regulatory Approvals

Different state commissions apply different standards—some evaluate mergers under a "net benefits" test while others use a "no harm" standard. Pennsylvania and New Jersey, where both companies have substantial operations, will be particularly scrutinized given the combined company's significant concentration in those markets.

Timeline to Close

The companies expect to close by the end of Q1 2027, approximately one year from the deal announcement. 3 State regulatory proceedings are expected to extend through Q4 2026, with final approvals anticipated in late 2026 or early 2027.

Leadership: Franklin to Executive Vice Chair

Post-close, American Water's current leadership will guide the combined company:

Franklin will serve as executive sponsor of the integration task force, leveraging his deep experience in water utility operations. Essential's Bryn Mawr and Pittsburgh offices will maintain a strong operational presence long-term. 8

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Strategic Rationale: Why This Deal Makes Sense

1. Scale in a Fragmented Industry

The U.S. water utility industry remains highly fragmented, with approximately 85% of systems still municipally owned. 1 The combined company will be better positioned to pursue acquisition opportunities as municipalities look to divest aging infrastructure.

2. Infrastructure Investment Mandate

America's water infrastructure faces a multi-trillion-dollar investment need over the coming decades. The combined company's enhanced scale will support:

• Pipe replacement programs
• PFAS remediation
• Lead service line replacements
• Water treatment facility upgrades

The combined rate base of ~$29.3 billion provides a foundation for sustained capital deployment at 8-9% annual growth. 2

3. Geographic Diversification

The merger expands American Water into three new states (Texas, North Carolina, Ohio) while deepening its presence in Pennsylvania and New Jersey. Geographic diversification reduces regulatory concentration risk and provides more opportunities for growth.

4. Natural Gas Optionality

Essential brings Peoples Natural Gas to the combined company—a growing natural gas distribution utility serving ~746,000 customers in western Pennsylvania and Kentucky. 4 Peoples has doubled its rate base in the five years under Essential's ownership and is growing at >10% annually.

American Water has indicated it will review strategic alternatives for non-water and non-wastewater businesses after closing, potentially including Peoples.

What's Next: Key Catalysts to Watch

Investors should monitor state regulatory proceedings closely. Any conditions imposed by regulators—such as rate freezes, required divestitures, or employment commitments—could affect the combined company's financial flexibility.

Bottom Line

Essential Utilities shareholders' overwhelming 94.8% approval removes a significant hurdle for the largest water utility merger in U.S. history. The deal creates a $63 billion enterprise serving nearly 20 million people across 17 states, with the financial scale to tackle America's aging water infrastructure.

The shareholder vote was never in serious doubt given the strategic logic and modest premium. The real test lies ahead: navigating approvals from seven or more state utility commissions, each with its own process and standards.

For Essential shareholders, today's vote locks in exposure to a larger, more diversified utility platform with maintained 7-9% growth targets. For American Water shareholders, the integration execution and regulatory outcomes will determine whether this combination delivers on its promise.

The merger remains on track for a Q1 2027 close.

Related

• American Water Works Company, Inc. (awk)-1.07%
• Essential Utilities, Inc. (wtrg)-0.58%

Sources: Essential Utilities Special Meeting Transcript (Feb 10, 2026), American Water 8-K (Feb 10, 2026), Essential Utilities 8-K (Feb 10, 2026), Company SEC Filings, Reuters, NJBIZ, MLex