American Water to acquire Nexus Utilities assets for $315 million

CAMDEN, N.J. - American Water Works Company, Inc. (NYSE: AWK), the nation’s largest regulated water and wastewater utility with a market capitalization of $28 billion, has entered into an agreement with Nexus Regulated Utilities, LLC, a subsidiary of Nexus Water Group, Inc., to purchase water and wastewater systems in eight states. The deal, valued at approximately $315 million, is subject to adjustments as outlined in the purchase agreement. According to InvestingPro analysis, AWK is currently trading above its Fair Value, with strong revenue growth of nearly 12% over the last twelve months.

The acquisition, which will add nearly 47,000 customer connections, will expand American Water’s presence within its current footprint in Illinois, Indiana, Kentucky, Maryland, New Jersey, Pennsylvania, Tennessee, and Virginia. John Griffith, President and CEO of American Water, expressed the company’s enthusiasm for the transaction, highlighting it as an execution of their core growth strategy and a means to deliver improved services to new customers. InvestingPro data reveals the company maintains healthy profit margins with a gross profit margin of 60.3%, suggesting strong operational efficiency. For deeper insights into AWK’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Both American Water and Nexus Water Group are committed to a seamless transition for customers post-acquisition. The deal also includes a commitment from American Water to offer employment to the approximately 70 Nexus Water Group affiliates’ employees currently serving in the acquired areas.

Rob MacLean, President and CEO of Nexus Water Group, stated that the agreement would allow them to concentrate on a smaller core geography, aiming for growth and efficient service delivery. The sale is also expected to support the professional development of their local employees.

The transaction is contingent on regulatory approval from state public utility commissions and other customary governmental approvals. The estimated time frame for completion is by or before August 2026.

American Water, with a history dating back to 1886, serves over 14 million people through regulated operations in 14 states and on 18 military installations. The company employs 6,700 professionals leveraging their expertise to provide essential water and wastewater services. InvestingPro analysis highlights AWK’s impressive dividend track record, having raised its dividend for 11 consecutive years and maintained payments for 18 years straight, with a current yield of 2.3%. InvestingPro subscribers have access to 8 additional ProTips and extensive financial metrics for informed investment decisions.

This news is based on a press release statement. The completion of this acquisition hinges on meeting various conditions, including obtaining all necessary regulatory approvals. Forward-looking statements made by American Water reflect management’s current expectations and are subject to risks and uncertainties that could materially affect actual results.

In other recent news, American Water Works reported its first-quarter 2025 earnings, revealing a revenue beat but a slight miss on earnings per share (EPS) compared to analyst forecasts. The company reported an EPS of $1.05, slightly below the forecast of $1.09, while revenue reached $1.14 billion, surpassing the anticipated $1.12 billion. This revenue increase was attributed to authorized rate hikes and acquisitions. American Water Works also announced an 8% dividend increase in April, reflecting management’s confidence in the company’s growth trajectory.

Argus analysts maintained their Buy rating on American Water Works with a price target of $155, citing consistent revenue and earnings growth driven by strategic rate hikes and acquisitions. The firm’s robust financial position and commitment to increasing dividends were also highlighted. American Water Works reaffirmed its 8% EPS growth target for 2025, with a long-term earnings and dividend growth target of 7-9%.

The company continues to focus on infrastructure investments and acquisitions, with $518 million invested in the first quarter. American Water Works remains committed to growing its regulated rate base by 8-9%, driven by continued acquisitions and infrastructure improvements. The company’s strong market performance and stability are underscored by its low beta, indicating less volatility compared to the broader market.

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