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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form 8-K
Current Report
Pursuant to
Section 13 or 15(d)
of the Securities
Exchange Act of 1934
Date
of Report (Date of earliest event reported): October 26, 2025
Essential Utilities,
Inc.
(Exact
name of registrant as specified in its charter)
Commission
File Number: 001-06659
| Pennsylvania |
23-1702594 |
(State
or other jurisdiction
of
incorporation) |
(IRS
Employer
Identification
No.) |
762
West Lancaster Avenue
Bryn Mawr,
Pennsylvania 19010-3489
(Address
of principal executive offices, including zip code)
(610) 527-8000
(Registrant’s
telephone number, including area code)
Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following
provisions:
| x | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered
pursuant to Section 12(b) of the Act:
| Title
of Each Class |
|
Trading
Symbol |
|
Name
of Each Exchange on Which Registered |
| Common
stock, par value $0.50 per share |
|
WTRG |
|
New
York Stock Exchange |
Indicate by check mark
whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or
Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01. | Entry into a Material
Definitive Agreement. |
Execution of Agreement
and Plan of Merger with American Water Works Company, Inc.
On October
26, 2025, American Water Works Company, Inc. (“American Water” or “Parent”), Alpha Merger Sub, Inc., a
direct wholly owned subsidiary of Parent (“Merger Sub”), and Essential Utilities, Inc. (“Essential” or
the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement,
which has been unanimously approved by the present members of the Board of Directors of each of American Water and Essential,
provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and
into Essential (the “Merger”), with Essential surviving the Merger as a wholly owned subsidiary of American Water.
Subject to the terms and conditions of the Merger Agreement, at the time at which the Merger becomes effective (the “Effective
Time”), each share of common stock, par value $0.50 per share, of Essential (“Essential Common Stock”), issued
and outstanding immediately prior to the Effective Time, other than any shares of Essential Common Stock owned by American Water
or Merger Sub or by Essential as treasury stock (in each case, other than restricted shares), will be converted into the right
to receive 0.305 shares (the “Exchange Ratio”) of validly issued, fully paid and nonassessable common stock, par value
$0.01 per share, of American Water (“American Water Common Stock”) (the aggregate number of such shares of American
Water Common Stock to be issued in the Merger, the “Merger Consideration”).
The Merger
Agreement provides for the treatment of outstanding equity awards of Essential, depending on the type of award. Under the Merger
Agreement, at the Effective Time, (i) each outstanding option to acquire Essential Common Stock, whether vested or unvested, will
be converted into an adjusted option to acquire a number of shares of American Water Common Stock determined by applying the Exchange
Ratio to the number of shares of Essential Common Stock that may be acquired thereunder, with an adjusted exercise price determined
by applying the Exchange Ratio to the exercise price of such option, and otherwise on the same terms and conditions as the original
option to acquire Essential Common Stock, except that any performance-based vesting conditions will no longer apply to the adjusted
option; (ii) each outstanding restricted share of Essential Common Stock will be converted into a number of adjusted restricted
shares of American Water Common Stock as determined by applying the Exchange Ratio and otherwise on the same terms and conditions
as the original restricted share of Essential Common Stock; (iii) each outstanding time-based restricted stock unit (“RSU”)
award in respect of Essential Common Stock will be converted into an adjusted number of time-based RSU awards in respect of American
Water Common Stock as determined by applying the Exchange Ratio and otherwise on the same terms and conditions as the original
time-based RSU award in respect of Essential Common Stock; and (iv) each outstanding performance-based restricted stock unit award
(“PSU”) in respect of Essential Common Stock (for ongoing performance periods, as determined based on the greater
of target and actual performance through the Effective Time) will be converted into an adjusted number of time-based RSU awards
in respect of American Water Common Stock by applying the Exchange Ratio and otherwise on the same terms and conditions as the
original PSU award in respect of Essential Common Stock, except that any performance-based vesting conditions will no longer apply
to the adjusted RSU awards.
American
Water, Merger Sub and Essential have each made customary representations, warranties and covenants in the Merger Agreement, including
covenants not to solicit alternative transactions and, subject to certain exceptions, not to participate in discussions or negotiations
regarding, or furnish non-public information in connection with, a proposal or offer with respect to an alternative transaction.
Until the Effective Time, each of American Water, Merger Sub and Essential has agreed to operate its business in the ordinary
course of business consistent with past practice in all material respects and has agreed to certain other restrictive covenants.
Additionally, American Water’s Board of Directors and Essential’s Board of Directors are each required to recommend
the approval of the applicable Merger-related proposals to its respective shareholders, subject to certain exceptions.
Consummation
of the Merger is subject to certain customary conditions, including, without limitation: (i) approval by American Water’s
shareholders of the issuance of the shares of American Water Common Stock to be issued as Merger Consideration in the Merger;
(ii) approval of the Merger Agreement by Essential’s shareholders; (iii) the authorization for listing of shares of American
Water Common Stock to be issued as Merger Consideration in the Merger on the New York Stock Exchange; (iv) receipt of certain
governmental approvals, including (a) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, (b) the approval of certain public utility commissions, in each case on such terms and conditions
that would not, individually or in the aggregate, result in a “Burdensome Effect” (as defined in the Merger Agreement);
(v) the absence of any law or judgment prohibiting the consummation of the Merger; (vi) the effectiveness of a registration statement
on Form S-4 to be filed by American Water to register the shares of American Water Common Stock to be issued as Merger Consideration
in the Merger; (vii) the accuracy of the representations and warranties of the parties (subject to customary materiality qualifiers);
(viii) each party’s performance in all material respects of its obligations contained in the Merger Agreement; and (ix)
the absence of any “Parent Material Adverse Effect” or “Company Material Adverse Effect” (in each case,
as defined in the Merger Agreement) on American Water or Essential, as applicable, since the date of the Merger Agreement.
The Merger
Agreement contains certain customary termination rights for American Water and Essential, including, without limitation, if the
Merger is not consummated on or before April 26, 2027, which date may be extended for a period of three months up to two times,
until October 26, 2027 at the latest, in specified circumstances and subject to certain conditions and if necessary to obtain
required regulatory approvals. Upon termination of the Merger Agreement under specified circumstances, including a change in the
recommendation of Essential’s or American Water’s Board of Directors, the termination by Essential or American Water
in order to accept a superior proposal with respect to an alternative transaction, or Essential or American Water entering into
a definitive agreement in respect of a competing transaction within 12 months of termination of the Merger Agreement in certain
circumstances involving a potential competing transaction proposal, Essential will be required to pay American Water a cash termination
fee of $370 million or American Water will be required to pay Essential a cash termination fee of $835 million.
The Merger
Agreement provides that, upon consummation of the Merger, American Water’s Board of Directors shall be comprised of 15 directors,
including the 10 directors serving on American Water’s Board of Directors at the Effective Time and five directors selected
by Essential from directors on Essential’s Board of Directors as of the date of the Merger Agreement, and following reasonable
consultation with American Water. American Water’s Board Chair will continue to serve in such role following the consummation
of the Merger. Upon the consummation of the Merger, John C. Griffith will continue to serve as a director and President and Chief
Executive Officer of American Water, and Christopher H. Franklin, Essential’s current Chairman of the Board of Directors
and Chief Executive Officer, will serve as Executive Vice Chair of American Water’s Board of Directors for a period of two
years following the Effective Time. The foregoing reflects expected changes to Parent’s directors and officers as reflected
in terms of the Merger Agreement, which changes are proposed to occur upon the Effective Time; however, these provisions do not
constitute the removal, resignation, appointment or election of a director or any officer, and no approval of these expected changes
has occurred.
The Merger
Agreement provides that American Water will retain its current name, maintain its headquarters and principal corporate office
in Camden, New Jersey, and maintain substantial operations in Pennsylvania.
The foregoing
description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full
text of the Merger Agreement, which is attached hereto as Exhibit 2.1 and the terms of which are incorporated herein by reference.
| Item 7.01. | Regulation FD Disclosure. |
On October
27, 2025, American Water and Essential issued a joint press release announcing the execution of the Merger Agreement. A copy of
the joint release is furnished as Exhibit 99.1. On October 27, 2025, American Water and Essential also released a joint investor
presentation relating to the Merger. A copy of the investor presentation is furnished as Exhibit 99.2.
The information
furnished in response to this Item 7.01, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed to be “filed”
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall such
information be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange
Act, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01. | Financial Statements and
Exhibits. |
(d) Exhibits.
The following
exhibits to this Current Report have been filed herewith (except as noted below):
| Exhibit
No. |
|
Description |
| 2.1* |
|
Agreement and Plan of Merger, dated as of October 26, 2025, by and among American Water Works Company, Inc., Alpha Merger Sub, Inc., and Essential Utilities, Inc. |
| 99.1** |
|
Joint Press Release, dated October 27, 2025, issued by American Water Works Company, Inc. and Essential Utilities, Inc. |
| 99.2** |
|
Joint Investor Presentation of American Water Works Company, Inc. and Essential Utilities, Inc., as of October 27, 2025. |
| 104 |
|
Cover
Page Interactive Data File (the cover page XBRL tags are included and formatted as Inline XBRL). |
| * | Filed herewith. Certain schedules
and exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company will furnish the omitted
schedules and exhibits to the Securities and Exchange Commission (the “SEC”) upon request. |
The Merger
Agreement filed as Exhibit 2.1 herewith has been included to provide investors and security holders with information regarding
its terms. It is not intended to provide any other factual information about American Water or Essential, or any of their respective
subsidiaries or affiliates. The representations, warranties and covenants contained in the Merger Agreement (i) were made by the
parties thereto only for purposes of that agreement and as of specific dates; (ii) were made solely for the benefit of the parties
to the Merger Agreement; (iii) may be subject to limitations agreed upon by the contracting parties, including being qualified
by confidential disclosure schedules exchanged between the parties in connection with the execution of the Merger Agreement (such
disclosure schedules having included information in each party’s public disclosures, as well as additional non-public information);
(iv) may have been made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of
establishing these matters as facts; and (v) may be subject to standards of materiality applicable to the contracting parties
that differ from those applicable to investors.
Investors
should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual
state of facts or condition of American Water or Essential, or any of their respective subsidiaries or affiliates. Additionally,
the representations, warranties, covenants, conditions and other terms of the Merger Agreement may be subject to subsequent waiver
or modification. Moreover, information concerning the subject matter of the representations, warranties and covenants may change
after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in Essential’s public
disclosures. The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information
regarding Essential that is or will be contained in, or incorporated by reference into, the reports and other documents that are
or to be filed by Essential with the SEC.
Cautionary Statement Concerning
Forward-Looking Statements
Certain
statements included in this Current Report on Form 8-K (or the exhibits thereto) are forward-looking statements within the meaning
of Section 27A of the Securities Act, Section 21E of the Exchange Act 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,”
“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 and Essential 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 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 Current Report on Form 8-K as a result of the factors discussed in American Water’s Annual Report on Form
10-K for the year ended December 31, 2024, as filed with the SEC on February 19, 2025 (available at: ir.amwater.com), Essential’s
Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 27, 2025 (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) the ability
to timely or at all obtain the requisite shareholder approvals with respect to each party; (3) 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); (4) an event, change or other circumstance that
could give rise to the termination of the merger agreement; (5) the failure to satisfy or waive a condition to closing of the
proposed merger on a timely basis or at all; (6) a delay in the timing to consummate the proposed merger; (7) the failure to integrate
the parties’ businesses successfully; (8) the failure to fully realize cost savings and any other synergies from the proposed
merger or that such benefits may take longer to realize than expected; (9) negative or adverse impacts of the announcement of
the proposed merger on the market price of American Water’s or Essential’s common stock; (10) the risk of litigation
related to the proposed merger; (11) 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;
(12) the diversion of each party’s management’s time and attention from operations of such party; (13) the challenging
macroeconomic environment, including disruptions in the water and wastewater utility industries; (14) 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, operation and maintenance costs; (15) 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; (16) changes in each party’s key management and personnel; (17) changes in tax laws that could adversely
affect beneficial tax treatment of the proposed merger; (18) regulatory, legislative, local or municipal actions affecting the
water and wastewater industries, which could adversely affect the parties’ respective utility subsidiaries; and (19) other
economic, business and other factors, including inflation and interest rate fluctuations. 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’s respective annual and quarterly reports as filed with
the SEC, 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 of this Current Report on Form 8-K. Neither American Water nor Essential
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 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’s 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.
Important Additional Information
about the Proposed Merger and Where to Find It
In connection
with the proposed merger, American Water will file a registration statement on Form S-4, which will include a document that serves
as a prospectus of American Water with respect to the shares of American Water’s common stock to be issued in the proposed
merger and a joint proxy statement of American Water and Essential for their respective shareholders (the “joint proxy statement/prospectus”),
and each party will file other documents regarding the proposed merger with the SEC. This communication is not a substitute for
the registration statement, the joint proxy statement/prospectus or any other document that American Water or Essential may file
with the SEC or mail to their respective shareholders in connection with the proposed merger. BEFORE MAKING ANY VOTING OR INVESTMENT
DECISION, INVESTORS AND SECURITY HOLDERS OF EACH PARTY ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THE REGISTRATION STATEMENT,
THE JOINT PROXY STATEMENT/PROSPECTUS, ANY AMENDMENTS OR SUPPLEMENTS THERETO AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC OR
INCORPORATED BY REFERENCE INTO THE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS WHEN THEY BECOME AVAILABLE, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION. A definitive joint proxy statement/prospectus will be sent to American Water’s
and Essential’s shareholders. Investors and security holders will be able to obtain the registration statement, the joint
proxy statement/prospectus and the other documents filed regarding the proposed merger free of charge from the SEC’s website
or from American Water or Essential. The documents filed by American Water with the SEC may be obtained free of charge at American
Water’s investor relations website at ir.amwater.com or at the SEC’s website at www.sec.gov. The documents filed by
Essential with the SEC may be obtained free of charge at Essential’s website at essential.co or at the SEC’s website
at www.sec.gov. The information included on, or accessible through, American Water’s or Essential’s respective websites
is not incorporated by reference into, and does not form a part of, this Current Report on Form 8-K.
Participants in the Solicitation
American
Water, Essential and certain of their respective directors and executive officers may be deemed to be participants in the solicitation
of proxies from American Water’s and Essential’s respective shareholders in connection with the proposed merger. Information
about the directors and executive officers of American Water, including a description of their direct or indirect interests, by
security holdings or otherwise, is set forth in American Water’s definitive proxy statement for its 2025 Annual Meeting
of Shareholders, which was filed with the SEC on March 27, 2025, including under the headings “Compensation Discussion and
Analysis,” “Director Compensation,” “Equity Compensation Plan Information,” and “Certain Beneficial
Ownership Matters.” To the extent holdings of American Water’s common stock by the directors and executive officers
of American Water have changed or do change from the amounts of American Water’s common stock held by such persons as reflected
therein, such changes have been or will be reflected on Initial Statements of Beneficial Ownership of Securities on Form 3 (“Form
3”), Statements of Changes in Beneficial Ownership on Form 4 (“Form 4”) or Annual Statements of Changes in Beneficial
Ownership of Securities on Form 5 (“Form 5”), in each case filed with the SEC. Information about the directors and
executive officers of Essential, including a description of their direct or indirect interests, by security holdings or otherwise,
is set forth in Essential’s definitive proxy statement for its 2025 Annual Meeting of Shareholders, which was filed with
the SEC on March 25, 2025, including under the headings “Director Compensation” and “Compensation Discussion
and Analysis.” To the extent holdings of Essential’s common stock by the directors and executive officers of Essential
have changed or do change from the amounts of Essential’s common stock held by such persons as reflected therein, such changes
have been or will be reflected on Forms 3, Forms 4 or Forms 5, in each case filed with the SEC. Additionally, information regarding
the respective directors and executive officers of American Water and Essential and other participants in each respective proxy
solicitation and a description of their direct and indirect interests in the proposed merger, by security holdings or otherwise,
will be contained in the registration statement and joint proxy statement/prospectus and other relevant materials to be filed
with the SEC regarding the proposed merger when such materials become available. Investors and security holders should read the
registration statement and joint proxy statement/prospectus carefully when it becomes available before making any voting or investment
decisions. Investors may obtain free copies of these documents from American Water and Essential as indicated above.
No Offer or Solicitation
This Current
Report on Form 8-K is not intended to, and shall not, constitute an offer to sell or the solicitation of an offer to buy any securities,
or a solicitation of any vote for approval, nor shall there be any offer or sale of securities or solicitation of any vote or
approval 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.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
| |
|
|
ESSENTIAL
UTILITIES, INC. |
| |
|
|
|
|
| Dated: |
October
27, 2025 |
|
By: |
/s/ Christopher
H. Franklin |
| |
|
|
|
Christopher
H. Franklin |
| |
|
|
|
Chairman
and Chief Executive Officer |
