American Water and Essential Utilities Receive Kentucky PSC Approval for Landmark Merger

Key Highlights

• Kentucky Public Service Commission (PSC) Approves Merger: This is the first regulatory approval received for the proposed merger between American Water Works Company, Inc. (NYSE: AWK) and Essential Utilities, Inc. (NYSE: WTRG).
• Shareholder Approval Secured: The deal secured overwhelming support from shareholders of both companies in February 2026.
• All-Stock Transaction Announced: Originally announced on October 27, 2025, this merger is structured as an all-stock transaction.
• Combined Company Scale: The merged entity will serve over 4.7 million water and wastewater customer connections, and more than 740,000 gas customer connections.
• New Headquarters: The new company will operate under the American Water name and be headquartered in Camden, New Jersey.
• Expected Closing: The merger is anticipated to close by the end of Q1 2027, subject to remaining customary closing conditions and further regulatory approvals, including the Hart-Scott-Rodino Act clearance and other public utility commission approvals.
• Further Information: Investors and stakeholders can track updates at americanwateressentialutilitiesmerger.com.

Strategic Rationale and Company Profiles

American Water is the largest regulated water and wastewater utility in the United States, providing essential services to approximately 14 million people across 14 states and 18 military installations. The company employs around 7,000 professionals and is recognized for its national scale, operational excellence, and commitment to sustainability.

Essential Utilities operates as Aqua and Peoples brands and serves about 5.5 million people across nine states, with a focus on water, wastewater, and natural gas services. The company is known for its dedication to sustainable growth, customer experience, and environmental stewardship, protecting thousands of acres of forests and habitats.

Shareholder and Price-Sensitive Information

• Regulatory Process: The Kentucky PSC’s approval is a significant milestone and could be viewed as reducing regulatory risk, potentially moving the share price. However, the merger still requires clearance under antitrust laws (Hart-Scott-Rodino Act) and approvals from other state utility commissions, so closing is not yet assured.
• Potential Risks: The deal is subject to several risks that could impact shareholder value, including:
  • Regulatory or governmental approvals may impose conditions or require divestitures that could reduce the expected benefits of the merger.
  • Delays in closing or failure to close could adversely affect the companies’ stock prices.
  • Integration risks, including failure to realize expected cost savings or operational synergies, could impact future earnings.
  • Litigation or legal challenges related to the merger could arise, adding uncertainty.
  • Disruption to business relationships with customers, suppliers, or employees during the merger process.
  • Changes in tax law or regulatory environments could affect the economics of the deal.
• Forward-Looking Statements: The companies caution that statements regarding the merger’s benefits, timing, and future performance are forward-looking and subject to numerous risks and uncertainties. Actual results may differ materially from current expectations.
• No Offer or Solicitation: The communication is not an offer to sell or the solicitation of an offer to buy any securities.

Important Contacts

• American Water Investor Relations: Aaron Musgrave, Vice President, Investor Relations, (856) 955-4029, [email protected]
• American Water Media Contact: Maureen Duffy, Executive Vice President, Communications and External Affairs, (856) 955-4163, [email protected]
• Essential Utilities Investor Relations: Brian Dingerdissen, Vice President, Treasurer, FP&A and IR, (610) 645-1191, [email protected]
• Essential Utilities Media Contact: David Kralle, Vice President of Public Affairs, Media Hotline: (877) 325-3477, [email protected]

Investment Takeaways

• This merger represents a significant consolidation in the U.S. water, wastewater, and natural gas utility sector and, if completed, will create one of the largest utility companies in North America.
• The regulatory approval process remains a key variable for investors to monitor, as additional approvals are required before the deal can close.
• Potential for operational efficiencies, expanded customer base, and long-term growth, but also notable integration and regulatory risks in the near term.
• Shareholders should track further regulatory developments, any announced conditions, and the companies’ updates regarding timing and expected benefits.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Readers are encouraged to review all company filings, regulatory materials, and consult with a financial advisor before making investment decisions. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from current expectations.

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