Filed by Essential Utilities, Inc.
pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-6(b)
under the Securities Exchange Act of 1934
Subject Company: Essential Utilities, Inc.
Commission File No.: 001-06659
Date: September 29, 2026
TO: All Essential Employees
FROM: Chris Franklin
SUBJECT: Integration Planning Update – Future Organizational Update & Day 1 Resources & Changes
Dear Colleagues,
As we continue integration planning with American Water, I wanted to share an update on our progress and what it means for our employees.
Future Organizational Update
We are continuing our thoughtful and intentional approach to future organizational design decisions. You can expect to hear more about
additional confirmed organizational roles for the combined company in late October and into early November. This next role selection
process will span the entire organization and will complete all future organizational roles.
Day 1 Resources & Changes
We are also actively preparing for what Day 1 will look like for all employees. To answer many of the questions that have been submitted
through our merger inbox, our teams are currently developing resources designed to help employees understand what to expect, and where
to find support, on Day 1 and beyond. These resources won’t answer every question; however, our goal is to address what we
can and provide a seamless day 1 experience for everyone. Additionally, as more decisions are finalized, we plan to share answers
to many employee questions and update our FAQs to reflect new or updated information.
To that end, we have made several decisions. The first reflects our shared core value of safety. We recognize that changes to familiar
routines can take time and adjustment. Beginning on Day 1 of the combined organization, employees will not be permitted to use cell phones
while driving on the job, including hands-free devices. American Water already follows this policy because research shows that hands-free
use can be just as distracting and dangerous as using a handheld phone. We are sharing this decision now, so you have time to prepare,
and I encourage everyone to begin adopting the practice when possible. Nothing matters more than each of you returning home safely at
the end of the day. We will provide additional information, training, and support in advance of the change.
Looking ahead, we have also agreed to establish a consistent approach to the personal use of company vehicles after closing. We understand
that this change may have a meaningful impact on employees who currently participate in a personal-use vehicle program, and we are committed
to managing the transition thoughtfully and respectfully. After the companies combine, we will work directly with affected employees and
provide ample time and guidance as the program is phased out. The program will end on December 31, 2028.
Two other decisions relate to the Delegation of Authority (DoA) and Service Company roles. American Water and Essential have different
DoA frameworks, and immediate harmonization would create operational and system challenges at close. So, on Day 1, we will operate with
modified American Water and Essential DoAs side-by-side, make targeted updates to Essential’s approval thresholds and rules, and
use American Water’s DoA for intercompany transactions. This approach will preserve business continuity, support existing SAP structures,
minimize disruption for employees, and allow a future end-state DoA to be developed after close.
Lastly, the new combined organization will largely maintain existing Service Company and Operating Company reporting relationship structures.
However, a limited number of roles will move to the Service Company on Day 1 where there is an immediate business need, or regulatory
requirements. We will communicate directly with those individuals.
While Day 1 is an important milestone, integration efforts will continue well beyond closing as we bring together our organizations, align
processes and systems, and build our future as a stronger combined company for the benefit of our customers and employees.
I continue to be encouraged by the collaboration, professionalism and commitment reflected in our planning efforts. While there is still
a lot of important work to do, we continue to expect to close the merger by the end of the first quarter of 2027.
Thank you for your ongoing engagement and focus as we continue to plan for a seamless merger and integration.
Best,
Chris
Cautionary Statement Regarding Forward-Looking Statements
Certain statements included in this communication are forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform
Act of 1995. In some cases, these forward-looking statements can be identified by words with prospective meanings such as “intend,”
“plan,” “estimate,” “believe,” “anticipate,” “expect,” “predict,”
“project,” “propose,” “assume,” “forecast,” “outlook,” “future,”
“likely,” “pending,” “goal,” “objective,” “potential,” “continue,”
“seek to,” “may,” “can,” “will,” “should” and “could,” or the
negative of such terms or other variations or similar expressions. Forward-looking statements may relate to, among other things: statements
about the benefits of the proposed merger, including future financial and operating results; the parties’ respective plans, objectives,
expectations and intentions; the expected timing and likelihood of completion of the merger and related transactions; the results of any
strategic review; expected synergies of the proposed merger; the timing and result of various regulatory proceedings related to the proposed
merger, and other general rate cases, filings for infrastructure surcharges and other governmental agency authorizations and proceedings,
and filings to address regulatory lag; the combined company’s ability to execute its current and long-term business, operational,
capital expenditures and growth plans and strategies; the amount, allocation and timing of projected capital expenditures and related
funding requirements; the future impacts of increased or increasing transaction and financing costs associated with the proposed merger
or otherwise, as well as inflation and interest rates; each party’s ability to finance current and projected operations, capital
expenditure needs and growth initiatives by accessing the debt and equity capital markets and sources of short-term liquidity; impacts
of the proposed merger on the future settlement or settlements of a party’s forward sale agreements, including potential adjustments
to the forward sale price or other economic terms thereunder, and the amount of and the intended use of net proceeds from any such future
settlement or settlements; the outcome and impact on other governmental and regulatory investigations; the filing of class action lawsuits
and other litigation and legal proceedings related to the proposed merger; the ability to complete, and the timing and efficacy of, the
design, development, implementation and improvement of technology and other strategic initiatives; each party’s ability to comply
with new and changing environmental regulations; regulatory, legislative, tax policy or legal developments; and impacts that future significant
tax legislation may have on each such party and on its business, results of operations, cash flows and liquidity.
These forward-looking statements are predictions based on currently available information, the parties’ current respective expectations
and assumptions regarding future events that American Water Works Company, Inc. (“American Water”) and Essential Utilities,
Inc. (“Essential Utilities”) believe to be reasonable. They are not, however, guarantees or assurances of any outcomes, performance
or achievements, and readers are cautioned not to place undue reliance upon them. You should not regard any forward-looking statement
as a representation or warranty by American Water, Essential Utilities or any other person that the expectation, plan or objective expressed
in such forward-looking statement will be successfully achieved in any specified time frame, or at all. The forward-looking statements
are subject to a number of estimates and assumptions, and known and unknown risks, uncertainties and other factors. Actual results may
differ materially from those discussed in the forward-looking statements included in this communication as a result of the factors discussed
in American Water’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities
and Exchange Commission (the “SEC”) on February 18, 2026 (available at: ir.amwater.com), Essential Utilities’
Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on February 26, 2026 (available
at: essential.co), and each party’s other filings with the SEC, and additional risks and uncertainties, including with respect
to (1) the parties’ ability to consummate the proposed merger pursuant to the terms of the definitive merger agreement or
at all; (2) each party’s requirement to obtain required governmental and regulatory approvals required for the proposed merger
(and/or that such approvals may result in the imposition of burdensome or commercially undesirable conditions, including required dispositions,
that could adversely affect the combined company or the expected benefits of the proposed merger); (3) an event, change or other circumstance
that could give rise to the termination of the merger agreement; (4) the failure to satisfy or waive a condition to closing of the
proposed merger on a timely basis or at all; (5) a delay in the timing to consummate the proposed merger; (6) the failure
to integrate the parties’ businesses successfully; (7) the failure to fully realize benefits, efficiencies and cost savings
from the proposed merger or that such benefits, efficiencies and cost savings may take longer to realize or be more costly to achieve
than expected; (8) negative or adverse impacts of the announcement of the proposed merger on the market price of American Water’s
or Essential Utilities’ common stock; (9) the risk of litigation, legal proceedings or other challenges related to the proposed
merger; (10) disruption from the proposed merger making it more difficult to maintain relationships with customers, employees, contractors,
suppliers, regulators, vendors, elected officials, governmental agencies, or other stakeholders; (11) the diversion of each party’s
management’s time and attention from ongoing business operations and opportunities of such party on merger-related matters; (12) the
challenging macroeconomic environment, including disruptions in the water and wastewater utility industries; (13) the ability of
each party to manage its respective existing operations and financing arrangements on favorable terms or at all, including with respect
to future capital expenditures and investments, operations, and maintenance costs; (14) changes in environmental laws and regulations
regarding each party’s respective operations that may adversely impact such party’s businesses or increase the cost of operations;
(15) changes in each party’s key management and personnel; (16) changes in tax laws that could adversely affect beneficial
tax treatment of the proposed merger; (17) regulatory, legislative, local or municipal actions affecting the water and wastewater
industries, which could adversely affect the parties’ respective utility subsidiaries; and (18) other economic, business and
other factors, including inflation, interest rate fluctuations or tariffs. The foregoing factors should not be construed as exhaustive.
These forward-looking statements are qualified by, and should be read together with, the risks and uncertainties set forth above and the
risk factors included in American Water’s and Essential Utilities’ respective annual and quarterly reports as filed with the
SEC and in the definitive joint proxy statement/prospectus, as filed with the SEC on December 31, 2025 (available at: https://www.sec.gov/Archives/edgar/data/1410636/000119312525337598/d15683d424b3.htm),
and readers should refer to such risks, uncertainties and risk factors in evaluating such forward-looking statements. Any forward-looking
statements speak only as of the date this communication is first used or given. Neither American Water nor Essential Utilities has any
obligation or intention to update or revise any forward-looking statement, whether as a result of new information, future events, changed
circumstances or otherwise, except as otherwise required by the federal securities laws. New factors emerge from time to time, and it
is not possible for American Water or Essential Utilities to predict all such factors. Furthermore, it may not be possible to assess the
impact of any such factor on American Water’s or Essential Utilities’ businesses, viewed independently or together, or the
extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking
statement.
Proposed Merger
For additional information regarding the proposed merger, please see American Water’s registration statement on Form S-4 (Registration No. 333-292182), which
was declared effective by the SEC on December 30, 2025, and the other documents that American Water or Essential Utilities has filed
or may file with the SEC.
No Offer or Solicitation
This communication is for informational purposes and is not intended to, and shall not, constitute an offer to sell or the solicitation
of an offer to buy any securities, nor shall there be any offer or sale of securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
