Union Pacific to Acquire Norfolk Southern in $85 Billion Deal, Sparking Industry Concerns

Union Pacific Corporation has announced an agreement to acquire Norfolk Southern Corporation in an $85 billion deal, aiming to establish the first transcontinental freight railroad in the United States. The combined network will span over 50,000 miles across 43 states, linking approximately 100 ports and nearly every corner of North America.

Under the terms of the agreement, Union Pacific will acquire Norfolk Southern in a stock and cash transaction, valuing Norfolk Southern at $320 per share. This represents a 25% premium to Norfolk Southern’s 30-trading day volume weighted average price as of July 16, 2025. The combined enterprise is expected to have an enterprise value exceeding $250 billion.

Union Pacific CEO Jim Vena emphasized the transformative potential of the merger, stating, "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 echoed this sentiment, highlighting the merger's role in "igniting rail’s ability to deliver for the whole American economy today and into the future."

The merger is projected to unlock approximately $2.75 billion in annualized synergies, primarily through increased revenue and operational efficiencies. However, achieving these synergies is expected to incur $2 billion in integration costs. The transaction includes a $2.5 billion breakup fee if the merger is not completed.

The proposed merger has sparked significant opposition from various stakeholders. Multiple U.S. rail customer groups, including the Freight Rail Customer Alliance and the Alliance for Chemical Distribution, have urged federal regulators to block or impose strict conditions on the merger, citing concerns over reduced competition, potential price increases, and diminished service quality. Senate Democratic leader Chuck Schumer criticized the deal as a "hostile takeover of America's infrastructure," expressing worries about monopolistic trends and their impact on service quality, safety, worker conditions, and shipping costs. The largest U.S. rail union, SMART Transportation Division, has also announced its intention to oppose the merger, raising concerns about potential job losses and safety risks.

Union Pacific and Norfolk Southern plan to file their formal merger application with the Surface Transportation Board (STB) by January 29, 2026. The STB's review process is expected to last up to 18 months, during which the board will evaluate the merger's impact on competition, service quality, and the public interest.

The merger would consolidate the industry from four to three major players, potentially triggering further consolidation, such as a BNSF-CSX merger. The combined company would handle approximately 40% of U.S. rail freight, raising concerns about reduced competition in a critical industry.

The last major railroad merger approved by the STB was Canadian Pacific's $31 billion acquisition of Kansas City Southern in 2023. Previous rail mergers have faced intense scrutiny from regulators, with concerns about service disruptions and market consolidation.

Union Pacific, headquartered in Omaha, Nebraska, operates primarily in the western United States, covering 23 states. As of 2022, it employed approximately 30,000 people and operated over 32,000 miles of track. Norfolk Southern, based in Atlanta, Georgia, operates in the eastern United States, covering 22 states. As of 2022, it employed around 19,300 people and operated over 19,500 miles of track.

The proposed merger between Union Pacific and Norfolk Southern represents a significant shift in the U.S. freight rail industry. While it offers potential operational efficiencies, the deal faces substantial opposition from various stakeholders concerned about its broader implications. The outcome will depend on regulatory scrutiny and the resolution of these concerns.