Illinois signs off as the American Water and Essential deal nears the finish

American Water's merger with Essential Utilities is now four state approvals in. The Illinois Commerce Commission approved the American Water and Essential Utilities merger on 6 November, three days after Essential posted its third-quarter results. Once it closes, the combined company will have more than 4.7 million water and wastewater customer connections.

Where the deal stands

Illinois joins Kentucky (April), Ohio (May) and Virginia (June) in approving the all-stock merger, which was announced in October 2025. The Hart-Scott-Rodino waiting period ended in August and shareholders of both companies have already voted in favour. Settlements are in place in Pennsylvania, North Carolina, Texas and New Jersey, though each still needs sign-off from its own commission. The companies still expect to close by the end of the first quarter of 2027, with the combined business keeping the American Water name and its Camden, New Jersey headquarters.

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Last week we covered American Water's plan for $4.1 billion of standalone capital spending in 2027. Essential brings its own pipeline of work to the table.

The quarter

Essential's revenue rose 6.6% to $508.3 million, with the water segment up 4.5% to $380.6 million. Diluted EPS was $0.36, against $0.33 a year earlier, and adjusted EPS, which strips out merger costs, was $0.38. Chairman and CEO Christopher Franklin pointed to "consistent earnings growth generated by both our water and natural gas divisions."

The money going into the ground

Essential invested about $1.1 billion across the company in the first nine months and expects roughly $1.7 billion for the full year. On the water side, rate awards and surcharges worth $53.6 million of annual revenue have come through so far in 2026, across Pennsylvania, Indiana, Illinois, Ohio, North Carolina and New Jersey. Another $78.5 million or so is pending in Texas, Virginia, Illinois, Indiana and New Jersey.

It is still buying systems, too. In October it closed a small Texas acquisition and signed three more in North Carolina and Pennsylvania. Signed deals now total about $290 million and more than 208,000 customers, most of that from the $276.5 million DELCORA agreement, and the company says it has a pipeline of about 400,000 potential customers.

The bigger picture

Investor-owned utilities grow two ways: by spending on the pipes they already own and by buying small municipal systems that need investment. Essential is doing both, and the merger puts that playbook inside a much bigger group. For waterworks suppliers and distributors, a combined buyer of this size is a large, steady customer whose procurement decisions will matter more in 2027.

What it means for hiring

We expect procurement and supplier programmes to be looked at again as the two utilities combine, which makes strategic and national account leaders at manufacturers and distributors especially valuable through 2027.
Steady acquisition of small systems across many states tends to reward distributors with good branch coverage and outside sales reps who know local utility operators.
A merger of this scale also needs utility-side leaders in capital planning, engineering and integration. In our view, people who have been through a large utility combination before will be in demand.

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