Regulation
Illinois Commission Backs Proposed American Water–Essential Merger
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American Water and Essential Utilities (WTRG ) announced on November 6, 2026 that the Illinois Commerce Commission had issued an order approving their proposed all-stock merger. The decision marks the fourth favorable state regulatory action for a transaction that would make Essential a wholly owned American Water subsidiary while retaining the American Water name for the combined business.
The Illinois decision follows approvals from the Kentucky Public Service Commission on April 21, 2026, the Public Utilities Commission of Ohio on May 13, 2026, and the Virginia State Corporation Commission on June 22, 2026.
Settlement agreements in the merger proceedings have also been reached in Pennsylvania, North Carolina, Texas and New Jersey. Those settlements are not final regulatory approvals: each remains subject to review and approval by the applicable public utility commission.
The Hart-Scott-Rodino waiting period expired on August 14, 2026, and shareholders of both companies approved the transaction earlier in 2026. Those milestones address the federal waiting period and shareholder votes, but they do not replace the remaining state commission decisions.
Fixed Stock Terms Set the Ownership Split
The transaction was announced on October 27, 2025, under a merger agreement dated October 26, 2025. Under the joint proxy statement/prospectus, American Water’s merger subsidiary will merge into Essential Utilities, with Essential surviving as a wholly owned subsidiary. Each eligible Essential common share will convert into 0.305 American Water common shares, while existing American Water shareholders will retain their shares.
The exchange ratio is fixed and will not adjust for stock-price movements at either company before completion. As a result, the implied value of the consideration for Essential shareholders can fluctuate with American Water’s share price. Based on common shares and stock-based awards outstanding on December 29, 2025, current American Water holders are expected to own approximately 69% and former Essential holders approximately 31% of the combined company’s outstanding common stock.
Rate Base and Growth Targets Frame the Combined Utility
The companies project more than 4.7 million water and wastewater customer connections and more than 740,000 natural-gas customer connections. The combined company would be headquartered in Camden, New Jersey, while Essential’s Bryn Mawr and Pittsburgh offices are planned to maintain a strong long-term operational presence.
The companies’ merger site describes a platform spanning 17 regulated states and an approximately $29.3 billion combined water and wastewater rate base as of the end of 2024. That figure excludes a $4.2 billion gas rate base and includes net utility plant not yet in rate base pending rate-case filings or outcomes. The definition therefore reaches beyond plant already reflected in rate base while keeping the separate gas figure outside the headline total.
Management targets post-close long-term rate-base growth of 8%–9%, alongside earnings-per-share and dividend growth of 7%–9% for the combined company. Adoption of American Water’s current dividend policy and payout target range remains subject to market conditions and board approval.
The companies expect to close by the end of the first quarter of 2027, subject to customary closing conditions and required approvals from the remaining applicable public utility commissions. Illinois advances the merger, but the pending settlements still require commission decisions. Whether those decisions align with the expected timetable is now the central open question for a transaction whose exchange ratio, ownership split and intended operating footprint have already been set out.
