Union Pacific and Norfolk Southern Announce Landmark Merger to Form Transcontinental Railroad

Union Pacific Corporation and Norfolk Southern Corporation have announced a definitive agreement to merge, aiming to create the first transcontinental freight railroad in the United States. The combined entity will operate over 50,000 route miles across 43 states, connecting approximately 100 ports and significantly enhancing the U.S. supply chain.

The merger values Norfolk Southern at an enterprise value of $85 billion. Under the terms of the agreement, Norfolk Southern shareholders will receive one Union Pacific common share and $88.82 in cash for each Norfolk Southern share, representing a 25% premium over Norfolk Southern's 30-day volume-weighted average price as of July 16, 2025. The combined company is projected to achieve approximately $2.75 billion in annualized synergies, with an expected increase in adjusted earnings per share in the second full year post-closing.

The merger is subject to approval by the Surface Transportation Board (STB), which will assess the transaction's impact on competition and the public interest. The companies plan to file their application with the STB within six months, aiming for transaction closure by early 2027.

This merger marks a significant consolidation in the U.S. rail industry, potentially prompting other major railroads to consider similar moves. While proponents highlight benefits such as improved efficiency and enhanced service offerings, critics express concerns over reduced competition and potential service disruptions.

Following the announcement, Union Pacific's stock price experienced a slight increase, reflecting investor optimism about the merger's potential benefits. Similarly, Norfolk Southern's stock price saw a modest uptick, indicating positive market sentiment regarding the acquisition.

The merger between Union Pacific and Norfolk Southern represents a transformative development in the U.S. transportation sector, with the potential to reshape freight logistics and influence future industry dynamics.