Essential Utilities (WTRG) investor relations material

Executive summary

• American Water and Essential Utilities have agreed to merge in an all-stock transaction, with Essential becoming a wholly owned subsidiary of American Water and its shareholders receiving 0.305 shares of American Water for each Essential share held.

• The merger is expected to close in the first quarter of 2027, subject to regulatory and shareholder approvals, and will create a leading regulated U.S. water and wastewater utility company with expanded geographic reach and customer base.

• Upon completion, former Essential shareholders will own approximately 31% and American Water shareholders 69% of the combined company.

• The merger is intended to qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code, though no IRS ruling or legal opinion is required as a closing condition.

Voting matters and shareholder proposals

• American Water shareholders will vote on the issuance of new shares for the merger and on the adjournment proposal to allow more time if needed.

• Essential shareholders will vote on the merger agreement, a non-binding advisory vote on executive compensation related to the merger, and an adjournment proposal.

• Both boards unanimously recommend voting in favor of all proposals.

• Approval requires a majority of votes cast at each company's special meeting, with specific rules for abstentions and broker non-votes.

Board of directors and corporate governance

• The post-merger board will have 15 directors: 10 from American Water and 5 from Essential, with the Essential CEO serving as Executive Vice Chair for two years.

• The current American Water CEO and Board Chair will retain their positions.

• Essential executives will assume senior roles in the combined company.