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The
combined company, which will use the name American Water, will
have about 4.7 million water connections across 17 states and on
18 military installations, from Hawaii to Pennsylvania.
Essential shareholders will receive 0.305 shares of American
Water for each share of that they own. American Water
shareholders will own about 69% and Essential shareholders will
own approximately 31% of the combined company once the merger is
complete.
There will be no change in customer rates tied to the merger.
American Water said that it plans to review strategic options
for its non-water and non-wastewater businesses once the deal
closes.
The combined company does not expect material changes to
employee compensation or benefits as a result of the deal. All
union contracts will continue to be honored in accordance with
their current terms.
“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,” American Water CEO John Griffith said in a statement
Monday.
Griffith will serve as president and CEO of the combined
company. Essential Chairman and CEO Christopher Franklin will
become executive vice chair for the board.
The combined company’s board will have 15 members. It will
include the 10 directors serving on American Water’s board prior
to the transaction's closing, which includes Griffith. Five
directors will be designated by Essential, including Franklin.
Karl Kurz, independent chair of American Water's board, will
continue to serve in such a role after the deal is completed.
The combined company will be headquartered in Camden, NJ, where
American Water is based. Essential’s Bryn Mawr and Pittsburgh
offices will each continue to maintain a strong operational
presence long term.
The deal is expected to close by the end of the first quarter of
2027. It still needs approval from each company's shareholders
and approval from the applicable public utility commissions.
Shares of American Water Works fell 3.5% in morning trading,
while Essential Utilities' stock declined slightly.
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