Union Pacific, a railroad giant based in Omaha, Nebraska, has announced its intentions to buy its smaller rival, Norfolk Southern, in a deal worth $85 billion. The acquisition would create the first coast-to-coast freight rail operator in the United States, reshaping the movement of goods from grains to autos across the country. If approved, the transaction would be the largest-ever buyout in the railroad sector.
The deal would combine Union Pacific’s stronghold in the western two-thirds of the US with Norfolk’s 31,382 km (19,500-mile) network that primarily spans 22 eastern states. The two railroads are expected to have a combined enterprise value of $250 billion and would unlock about $2.75 billion in annualised synergies. The $320 per share price implies a premium of 18.6 percent for Norfolk from its close on July 17, when reports of the merger first emerged.
The deal will face lengthy regulatory scrutiny amid union concerns about potential rate increases, service disruptions, and job losses. Major railroad unions have long opposed consolidation, arguing that such mergers threaten jobs and risk disrupting rail service. Jeremy Ferguson, president of the SMART-TD union’s transport division, said, “We will weigh in with the STB [regulator] and with the Trump administration in every way possible… This merger is not good for labour, the rail shipper/customer or the public at large.”
The Surface Transportation Board (STB) Chairman, Patrick Fuchs, has advocated for faster preliminary reviews and a more flexible approach to merger conditions. However, even under an expedited process, the review could take from 19 to 22 months. The companies said they expect to file their application with the STB within six months.
The proposed deal has also prompted competitors BNSF, owned by Berkshire Hathaway, and CSX to explore merger options. If both mergers are approved, the number of Class I railroads in North America would shrink to four from six, consolidating major freight routes and boosting pricing power for the industry. The last major deal in the industry was the $31 billion merger of Canadian Pacific and Kansas City Southern that created the first and only single-line rail network connecting Canada, the US, and Mexico.
The deal reflects a shift in antitrust enforcement under US President Donald Trump’s administration, with executive orders aimed at removing barriers to consolidation opening the door to mergers that were previously considered unlikely. The stock market has reacted negatively to the news, with Union Pacific’s stock down 3.9 percent and Norfolk Southern down 3.2 percent.