Union Pacific and Norfolk Southern Announce $85 Billion Merger to Form First Transcontinental Railroad in the U.S.

Union Pacific Corporation and Norfolk Southern Corporation have announced a definitive agreement to merge, aiming to create the first transcontinental railroad in the United States. The $85 billion deal seeks to combine Union Pacific's extensive western operations with Norfolk Southern's eastern network, resulting in a unified system spanning over 50,000 route miles across 43 states and connecting nearly 100 ports.

Under the terms of the agreement, Union Pacific will acquire Norfolk Southern in a stock and cash transaction. Norfolk Southern shareholders will receive one Union Pacific share and $88.82 in cash per share, valuing Norfolk Southern at $320 per share—a 25% premium over its 30-day volume-weighted average price as of July 16, 2025. The combined entity is expected to have an enterprise value exceeding $250 billion.

Union Pacific CEO Jim Vena will lead the merged company, which will be headquartered in Omaha, Nebraska. Atlanta, Georgia, will remain a core location focusing on technology, operations, and innovation. Vena emphasized the transformative potential of the merger, stating, "Railroads have been an integral part of building America since the Industrial Revolution, and this transaction is the next step in advancing the industry."

The merger is projected to generate approximately $2.75 billion in annual synergies by enhancing operational efficiency, eliminating interchange delays, and streamlining freight transport nationwide. The unified network aims to provide faster, more comprehensive freight services by reducing transit times and expanding intermodal services.

The transaction is subject to approval by the Surface Transportation Board (STB), which oversees rail industry competition and regulation. The approval process is expected to take over a year, involving public comments, hearings, and potential oversight terms. The STB's 2001 rules require mergers to demonstrate public benefits and preserve competition.

The nation's largest rail union, SMART-TD, has expressed opposition to the merger, citing concerns over safety, job security, and service quality. The union plans to voice its objections during the STB's regulatory review.

This proposed merger follows the 2023 approval of the Canadian Pacific-Kansas City Southern (CPKC) merger, which created the first single-line rail network connecting Canada, the United States, and Mexico. The Union Pacific-Norfolk Southern merger would further consolidate the U.S. rail industry, potentially reducing the number of major freight railroads from six to five.

Following the announcement, Union Pacific's stock price experienced a decline, while Norfolk Southern's shares saw an increase, reflecting mixed investor reactions to the merger's potential benefits and regulatory challenges.

The merger is expected to "transform the U.S. supply chain, unleash the industrial strength of American manufacturing, and create new sources of economic growth and workforce opportunity that preserves union jobs."

The U.S. freight rail industry has undergone significant consolidation over the past three decades, with major mergers reshaping the national rail map. The Surface Transportation Board's 2001 rules require mergers to demonstrate public benefits and preserve competition, indicating a rigorous review process ahead. The proposed merger follows the 2023 approval of the Canadian Pacific-Kansas City Southern merger, highlighting a trend toward consolidation in the North American rail industry.

As the regulatory review process unfolds, stakeholders across the industry will closely monitor the potential impacts of this historic merger on competition, service quality, and the broader U.S. economy.