Company: AWK
Filing Date: 2025-12-29
Form Type: S-4/A
Source: 0001193125-25-332292
Chunk: 59

Company: American Water Works Company, Inc.
Filing Date: 2025-12-29
Form: S-4/A
Chunk 59
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 agreement is terminated, 36

each party is restricted from, among other things, soliciting, initiating, knowingly encouraging, or knowingly facilitating the making of a proposal that is or would reasonably be expected to
lead to a competing proposal from any person. Each party’s board of directors is limited in its ability to change its recommendation with respect to the merger and related proposals. Either party may terminate the merger agreement and enter
into an agreement with respect to a superior proposal only if specified conditions have been satisfied, including compliance with the non-solicitation provisions of the merger agreement. These provisions could
discourage a third party that may have an interest in acquiring all or a significant part of American Water or Essential from considering or proposing such an acquisition, even if such third party were prepared to pay consideration with a higher per
share cash or market value than the consideration proposed to be received or realized in the merger, or the competing transaction might result in a potential acquirer proposing to pay a lower price than it would otherwise have proposed to pay
because of the added expense of the termination fee that may become payable in certain circumstances. Under the merger agreement, in the event the merger agreement is terminated and American Water accepts a superior proposal, or under certain other
circumstances, American Water would be required to pay a termination fee of $835 million to Essential, or in the event the merger agreement is terminated and Essential accepts a superior proposal or under certain other circumstances, Essential
would be required to pay a termination fee of $370 million to American Water.

The exchange ratio is fixed and will not be adjusted in the event of any change in either American Water’s or Essential’s stock price. As a result, the value of the merger consideration payable to Essential’s shareholders may be subject to change if American Water’s stock price fluctuates and may vary significantly from the value of such consideration as of the date of the merger agreement.

Upon completion of the merger,
each share of Essential common stock will be converted into the right to receive 0.305 of a share of American Water common stock. This exchange ratio will not be adjusted for changes in the market price of either American Water common stock or
Essential common stock between the date the merger agreement was signed and completion of the merger. Due to the fixed exchange ratio, fluctuations in the price of American Water common stock will drive corresponding changes in the value of the
merger consideration payable to each Essential shareholder. As a result, changes in the price of American Water common stock prior to the completion of the