Company: AWK
Filing Date: 2025-12-17
Form Type: S-4
Source: 0001193125-25-321389
Chunk: 73

Company: American Water Works Company, Inc.
Filing Date: 2025-12-17
Form: S-4
Chunk 73
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 Essential’s preliminary estimates. Any of these factors 44

could cause a decrease in the combined company’s earnings per share or decrease or delay the expected accretive effect of the merger and contribute to a decrease in the market price of the combined company’s common stock. If the merger is completed, the combined company may be required to record goodwill or may acquire other assets measured and recorded at fair value, and, thereafter, the combined company may be required to record impairments to the goodwill or changes to the fair value of the other assets, either of which may negatively affect our financial condition and results of operations of the combined company. In accordance with GAAP, American Water and Essential believe that the merger will be accounted for as an acquisition of Essential’s common stock by American Water and will follow the acquisition method of accounting for business combinations, including with respect to goodwill. Goodwill represents the excess of the purchase price paid over the fair value of the net tangible and other intangible assets acquired. Goodwill is recorded at fair value on the date of an acquisition and is reviewed annually or more frequently if changes in circumstances indicate the carrying value may not be recoverable. The combined company may be required to recognize goodwill in connection with the merger and in the future an impairment of goodwill, including any goodwill recognized in connection with the merger, or a change in fair value of financial instruments or certain other assets due to, for example, market conditions, other factors related to the performance of American Water’s or Essential’s business, or other circumstances that may impact the fair value of a financial instrument or the other asset. Market conditions could include a decline over a period of time of the stock price of the combined company, a decline over a period of time in valuation multiples of comparable water and wastewater utilities, market price performance of the combined company’s common stock that compares unfavorably to peer companies, or other circumstances. Recognition of impairments of goodwill and any changes in fair value of other assets would result in a charge to the combined company’s income in the period in which the impairment or change occurred, which may negatively affect the combined company’s financial condition, results of operations, and total capitalization. The effects of any such impairment or change could be material and could cause the combined company to miss forecasted results, which could adversely affect the combined company’s stock price, and make it more difficult to maintain the combined company’s credit ratings, secure financing on attractive terms, maintain compliance with debt covenants, and meet the expectations of the combined company’s regulators. The combined