Union Pacific to Acquire Norfolk Southern in $85 Billion Deal to Form Transcontinental Railroad

Union Pacific Corporation has announced an agreement to acquire Norfolk Southern Corporation in an $85 billion stock and cash transaction, aiming to establish the first transcontinental railroad in the United States. This merger would create a network spanning over 50,000 route miles across 43 states, connecting approximately 100 ports.

Under the terms of the agreement, Norfolk Southern shareholders will receive 1.0 Union Pacific common share and $88.82 in cash for each Norfolk Southern share, representing a 25% premium to Norfolk Southern's 30-trading day volume-weighted average price as of July 16, 2025. The combined enterprise is projected to have an enterprise value exceeding $250 billion and is expected to generate approximately $2.75 billion in annualized synergies.

Union Pacific CEO Jim Vena stated, "This combination is transformational, enhancing the best freight transportation system in the world – it's a win for the American economy, it's a win for our customers, and it’s a win for our people." Norfolk Southern CEO Mark George added, "We are confident that the power of Norfolk Southern’s franchise, diversified solutions, high-quality customers and partners, as well as skilled employees, will contribute meaningfully to America’s first transcontinental railroad."

The merger is subject to regulatory approval by the Surface Transportation Board (STB), a process anticipated to take about two years once the application is submitted, which is expected within six months.

Several U.S. rail customer groups have voiced concerns that the consolidation would lead to increased prices and diminished service quality. Seven shipper associations, including the Freight Rail Customer Alliance and the Alliance for Chemical Distribution, have urged regulators to block or impose strict conditions on the proposed merger. Additionally, the largest U.S. rail union, SMART Transportation Division (SMART-TD), has announced its opposition, citing concerns about potential negative impacts on rail workers, safety, service quality, and the overall health of the freight rail industry.

The last major railroad merger approved by the STB was Canadian Pacific's $31 billion acquisition of Kansas City Southern in 2023. Previous mergers, such as the Union Pacific and Southern Pacific merger in 1996, led to significant service disruptions, raising concerns about potential issues with the current proposed merger.

If approved, the merger could pressure other major players like BNSF and CSX to consider similar deals, potentially reducing the number of U.S. Class I railroads from four to two. Supporters argue the merger could improve efficiency by reducing congested interchanges, potentially benefiting consumers through streamlined logistics.

As of August 4, 2025, Union Pacific's stock price is $220.62, and Norfolk Southern's stock price is $277.85.

The proposed merger between Union Pacific and Norfolk Southern represents a significant shift in the U.S. railroad industry, with potential benefits and challenges that will be closely examined during the regulatory review process.