Union Pacific and Norfolk Southern Announce $85 Billion Merger to Form First Coast-to-Coast Freight Railroad

In a landmark move poised to reshape the U.S. freight rail industry, Union Pacific and Norfolk Southern have announced an $85 billion merger agreement. This consolidation aims to establish the nation's first coast-to-coast freight railroad, spanning over 50,000 miles across 43 states and connecting approximately 100 ports.

The merger, unveiled on July 29, 2025, combines Union Pacific's extensive western network with Norfolk Southern's eastern operations. Union Pacific CEO Jim Vena emphasized the strategic benefits, stating, "This merger will create a seamless coast-to-coast network, enhancing supply chain efficiency and supporting domestic manufacturing."

The combined entity is projected to have an enterprise value exceeding $250 billion. The deal is structured as a stock-and-cash transaction, offering Norfolk Southern shareholders one Union Pacific common share and $88.82 in cash for each share they own.

This merger reflects a broader resurgence in mergers and acquisitions (M&A) activity. Goldman Sachs President and COO John Waldron highlighted this trend during a Financial Times conference in New York on September 25, 2025. He noted that global M&A activity reached $2.6 trillion in the first seven months of 2025, the highest level since 2021. Waldron attributed this surge to accelerating industry consolidation and increased private equity participation. He also expressed optimism that forthcoming Federal Reserve interest rate cuts would further stimulate dealmaking by reducing borrowing costs.

The Union Pacific-Norfolk Southern merger is subject to regulatory approval by the U.S. Surface Transportation Board (STB). The STB's review will assess the merger's impact on competition, service, safety, and the public interest. Given the STB's stringent standards, the approval process is expected to be thorough and could extend into early 2027.

Historically, railroad mergers have faced significant scrutiny. The 1996 Union Pacific-Southern Pacific merger led to major service disruptions, and the 1999 division of Conrail between Norfolk Southern and CSX resulted in operational challenges. These precedents underscore the importance of careful regulatory evaluation to prevent adverse effects on the rail network.

The proposed merger has elicited mixed reactions. Proponents argue that a unified network could offer faster service, expanded intermodal offerings, and increased competition with trucking. Critics, including some labor unions and industry groups, express concerns over potential job losses and reduced competition. Senate Democratic leader Chuck Schumer cautioned that the merger could lead to "dangerous consolidation and monopoly power."

As the regulatory review progresses, stakeholders will closely monitor developments to ensure that the merger aligns with the public interest and maintains a competitive landscape in the freight rail industry.