The proposed merger between Union Pacific Corporation and Norfolk Southern Corporation would unite two major U.S. railroads, creating what would be the first single-line railroad linking the Atlantic and Pacific coasts. It was announced on July 29, 2025, following an agreement reached by the two freight railroads the previous day.
Union Pacific has proposed acquiring Norfolk Southern in a transaction valued at about $85 billion, consisting of both stock and cash. If approved, the merged company would operate under the Union Pacific name and have an estimated total value exceeding $250 billion. The merged network would span more than 50,000 route miles across 43 states and connect about 100 ports in North America.
Proponents of the deal cite the potential for faster service, expanded intermodal offerings, and increased competition with trucking, while critics warn of reduced competition and further consolidation in the U.S. rail industry. The merger is subject to review by the Surface Transportation Board under rules adopted in 2001, with a decision expected in 2027.
Details
The proposed merger between Union Pacific (UP) and Norfolk Southern (NS) was announced on July 29, 2025, one day after the companies reached an agreement on July 28, 2025.[1][2]
The merger agreement values Norfolk Southern at about $85 billion, or $320 per share.[3][4] The stock-and-cash transaction would provide Norfolk Southern shareholders with one Union Pacific common share and $88.82 in cash for each share they own. The combined company is projected to have an enterprise value exceeding $250 billion.[3]
The merger aims to establish the first coast-to-coast freight rail operator in the United States.[1] The combined network would cover more than 50,000 miles across 43 states and connect about 100 ports in North America. According to the companies, the goal is to improve the U.S. supply chain and address the decline in rail freight volume that has shifted to trucking since 2006.[1][5][6]
The merger is expected to provide faster, more competitive single-line service by removing the need for car transfers and reducing interchange delays, particularly at busy hubs such as Chicago and Memphis. Company estimates project transit time improvements of 24 to 48 hours for about one million shipments annually.[6][7]
The merger plan includes expanding intermodal services and opening new routes, which the companies say will enhance competition with trucking, ease highway congestion, and reduce wear on publicly funded roads.[6][7][1][5]
The companies expect the merger to create opportunities in underserved “watershed markets” in the central United States, spanning from Wisconsin to Louisiana and Mississippi.[7][6][5] In these areas, rail service has faced challenges competing with trucks on short hauls and complex routes. The expansion is projected to generate approximately $1.75 billion in additional revenue.[7]
The merger is projected to generate about $2.75 billion in annual synergies, combining anticipated revenue growth from converting freight from trucks to rail with an estimated $1 billion in cost and productivity savings.[6][8][4][5]
The companies have stated that they plan to preserve, and potentially expand, union jobs for all employees who wish to remain with the merged company. They anticipate job growth as a result of increased rail traffic.[6][1][5][4]
The companies plan to submit their full merger application to the Surface Transportation Board (STB) by January 29, 2026.[4][2] They aim to complete the transaction in early 2027[3], with regulatory review expected to conclude that year under STB statutory timelines.[6][7] The merger agreement is set to expire on January 28, 2028, but will automatically extend if the STB review takes longer than expected.[9]
Background
Union Pacific
The logo of Union Pacific Corporation
Union Pacific was established on July 1, 1862, with the signing of the Pacific Railway Act by President Abraham Lincoln.[1] Chief Executive Officer Jim Vena began his career in railroading as a union brakeman.[1][4] The company has faced operational challenges, including a major traffic backlog in Houston in 1997-1998 following its 1996 acquisition of Southern Pacific.[6] In 2024, Union Pacific completed the transition to its cloud-based NetControl computer system with a smooth, uninterrupted changeover.[6][7]
Union Pacific is the largest freight railroad in the United States. Its network covers 23 states in the western two-thirds of the country, reaching about 7,300 communities. The railroad serves the West Coast and portions of the South and Midwest[3], and is the leading rail carrier to and from the U.S.-Mexico border, serving all six major gateways.[1] The company employs more than 40,000 union workers.[1][10]
Union Pacific plays a key role in the global supply chain, transporting commodities such as coal, chemicals, food, forest products, automobiles, and agricultural products. It links businesses across the United States and to international markets.[5] The company promotes rail as the most fuel-efficient form of ground freight transportation and invests about $10 million daily in infrastructure, equipment, and technology to support sustainable operations.[1]
Norfolk Southern
Norfolk Southern's logo
Norfolk Southern, nicknamed “the Thoroughbreds,” traces its history to 1827 through its predecessor railroads. Over its history, it has transported goods and materials essential to the U.S. economy.[1]
The proposed merger values Norfolk Southern at about $85 billion, or $320 per share, in enterprise value. If completed, the combined company would have an estimated enterprise value of more than $250 billion.[8] Together, Norfolk Southern and Union Pacific employ over 50,000 people, about 80% of whom are union members.[6][10]
Norfolk Southern operates a 22-state freight network in the eastern United States, with the largest intermodal network in the region. Its system connects to most of the nation’s population and manufacturing base, as well as every major container port on the Atlantic coast and key ports on the Gulf Coast and Great Lakes.[5] If merged with Union Pacific, the combined network would span more than 50,000 route miles across 43 states and connect about 100 ports in North America, creating the first coast-to-coast freight railroad in the United States.[8]
Norfolk Southern is a major player in the U.S. freight rail industry. Its safety record, network, and financial performance are among its strongest attributes. The railroad moves about 7 million carloads each year, carrying goods from agricultural products to consumer items.[5] It also promotes sustainability, estimating that it helps customers avoid roughly 15 million tons of carbon emissions annually by shifting freight to rail.[5] Together, Norfolk Southern and Union Pacific handled 43% of all U.S. rail freight in the past year.[10]
Regulatory process
The proposed merger is under review by the Surface Transportation Board, a U.S. government agency that regulates railroads. The review will look at how the merger might affect competition, service, safety, and the public, with input from different groups.[2] This is the first major rail merger to be evaluated under the STB’s 2001 merger rules, which require that Class I railroad mergers enhance competition, not just maintain it, and serve the public interest.[6][10]
The regulatory review began with a notice of intent, which the STB acknowledged receiving on July 30, 2025.[2][4] This filing gives Union Pacific and Norfolk Southern three to six months to submit a formal merger application, which they plan to file by January 29, 2026. Once submitted, the STB will check if the application is complete and set a timeline for its review.[2] The approval process is expected to be completed by early 2027.[4]
A key feature of the proposed merger is that it does not use a voting trust (a voting trust is a setup where shareholders temporarily transfer their stock and voting rights to a trustee, usually for a set period of time).[7] Unlike some past rail mergers, this deal won’t be paid for until the STB approves it.[6] The chief financial officers of Union Pacific and Norfolk Southern said a voting trust might complicate and delay the deal, and that they prefer to file a full merger application to show it will boost competition and serve the public.[6]
The merger agreement requires Union Pacific to pay Norfolk Southern $2.5 billion if the STB rejects the deal or adds conditions that make it impossible to complete.[5][9] The STB currently has two Democratic and two Republican members, with a fifth seat awaiting appointment by President Trump.[10]
Antitrust considerations and competition
The merger has raised antitrust concerns because it would cut the number of major U.S. freight railroads from six to five, and the main competitors from four to three.[10] Senate Democratic leader Chuck Schumer described the move as a step toward “dangerous consolidation and monopoly power.”[11] An analysis found the merged company would handle about 43% of all U.S. rail freight in the past year.[10]
Critics, including shipper groups, argue that the merger could give the combined railroad greater ability to raise prices or lower service standards.[8] They also caution that it might prompt additional consolidation, such as a potential merger between BNSF and CSX, which could result in nearly 90% of U.S. rail freight being controlled by two companies.[10]
Union Pacific and Norfolk Southern executives contend that the merger would strengthen competition and benefit the U.S. economy.[6] They argue that a single coast-to-coast network would give faster, more competitive service by cutting transfer delays, adding new routes, and expanding rail–truck shipping options.[1] The companies say this would help them compete with Canadian railroads and bring back U.S. freight traffic and jobs.[5][7] They estimate the merger would cut shipping times by 24 to 48 hours for about one million loads a year[6][7] and create new growth in central U.S. markets where rail has had trouble competing with trucks.[6]
Supporters
Union Pacific reports that it has consulted with more than 100 customers who support the merger, citing interest in lower-cost rail options, improved service visibility, and fewer delays.[8][12] Hub Group, a competing intermodal operator, has publicly endorsed the deal, expecting benefits from a transcontinental network, reduced gateway congestion, and stronger competition with trucking.[13] The Intermodal Association of North America has adopted a neutral position, focusing on the importance of efficiency and customer service.[12]
Both of Nebraska’s U.S. senators have expressed public support for the merger.[11]
Opposition
Seven shipper associations, including the Freight Rail Customer Alliance, have urged regulators to block the merger or impose strict conditions, citing concerns over potential price increases, reduced service quality, and fewer routing options.[7] The American Chemistry Council and the Soy Transportation Coalition have also warned that the deal could raise costs for key industries.[12]
The Sheet Metal, Air, Rail, and Transportation Workers (SMART-TD), the largest U.S. rail union, said it will oppose the merger before the STB.[7] Rail unions have generally resisted consolidation over job and service risks.[11][8] SMART-TD expressed "measured skepticism", citing safety, service, and long-term industry health[14], and criticized Union Pacific’s safety record[3] and history of furloughs, contrasting it with Norfolk Southern’s pledge not to furlough conductors or engineers.[14]
Schumer has condemned the merger as a “hostile takeover of America’s infrastructure,” warning that it could result in “dangerous consolidation and monopoly power,” along with declining service, safety, and working conditions, and higher costs for shippers.[11] Senators Tammy Baldwin (D-Wis.) and Roger Marshall (R-Kan.) have also raised concerns with the STB about potential cost increases, unreliable service, and reduced competition.[11][10]
Market reaction
Following the merger announcement, shares of both Union Pacific and Norfolk Southern declined.[3] On the Tuesday after the news, Norfolk Southern’s stock fell by 3%, while Union Pacific’s dropped by 2.4%.[10]
The stock declines were seen as a sign of investor skepticism, largely due to uncertainty about the deal’s completion timeline and the potentially lengthy regulatory review.[3] The approval process is expected to finish by early 2027.[7][4]
Investors have also noted the financial risk if the merger does not move forward. The agreement includes a $2.5 billion reverse termination fee payable by Union Pacific to Norfolk Southern if the STB rejects the deal or imposes conditions considered too burdensome to complete it.[5] Such a fee underscores the potential cost to Union Pacific’s investors in the event of regulatory denial, drawing comparisons to past cases such as AT&T’s unsuccessful bid for T-Mobile, which resulted in a substantial termination payment.[9]
Despite initial investor concerns, Union Pacific and Norfolk Southern have presented the merger as a compelling value proposition for shareholders. The merger terms value Norfolk Southern at $320 per share, a 25% premium over its 30-day volume-weighted average price as of July 16, 2025.[5]
The merged company is expected to have an enterprise value of more than $250 billion[4] and to generate about $2.75 billion in annual synergies.[8]
Union Pacific expects the merger to increase its adjusted earnings per share (EPS) in the second full year after closing, with accretion rising to the high single digits in subsequent years. Under the merger terms, Norfolk Southern shareholders would receive one Union Pacific common share and $88.82 in cash for each share they hold, resulting in a 27% ownership stake in the combined company on a fully diluted basis and allowing them to share in future growth and synergies.[5]
Both companies plan to suspend share repurchase programs through 2028 but intend to continue paying dividends.[7][6]
Previous consolidation in the railroad industry
Since 1980, the number of Class I railroads in the United States has declined from about 40 to six.[12] The proposed Union Pacific–Norfolk Southern merger would reduce that number to five.[10] This long-term trend of consolidation has led to increased scrutiny and the development of updated oversight guidelines by the STB.
Railroad mergers have often faced skepticism and, in some cases, have resulted in major service disruptions. Senate Democratic leader Chuck Schumer has argued that “the last four decades of railroad mergers have led to worse service, worse safety, worse working conditions, [and] higher costs for shippers—which ultimately means higher prices for consumers.”[11]
Union Pacific’s 1996 acquisition of Southern Pacific resulted in a major traffic backlog in Houston during 1997 and 1998, which was attributed to operational decisions.[6][7]
Following the 1999 division of Conrail with CSX, Norfolk Southern experienced immediate service problems caused by information technology issues.[6][7]
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