Union Pacific has announced plans to acquire Norfolk Southern in a blockbuster $85 billion deal that would create the first coast-to-coast freight rail operator in the United States — and dramatically reshape how goods like grain, autos, and fuel move across the country.
The deal, revealed Tuesday, marks the largest-ever proposed buyout in railroad history.
Union Pacific, based in Omaha, Nebraska, dominates the western U.S., while Norfolk Southern’s 19,500-mile rail network stretches across 22 eastern states. The combined entity would hold an estimated enterprise value of $250 billion and generate an expected $2.75 billion in annual savings, the companies said.
The offer values Norfolk Southern at $320 per share, an 18.6% premium from its July 17 closing price, when initial reports of merger talks first surfaced.
Still, the deal is likely to face tough regulatory scrutiny. Union Pacific’s 1996 merger with Southern Pacific caused widespread service delays in the Southwest. Now, labor unions are sounding alarms over the potential for higher shipping rates, job losses, and service disruptions.
“This merger is not good for labour, the rail shipper/customer or the public at large,” said Jeremy Ferguson, president of the SMART-TD union, North America’s largest railroad operating union. “We will weigh in with the STB and with the Trump administration in every way possible.”
The Surface Transportation Board (STB), the top U.S. railroad regulator, will review the application — which Union Pacific and Norfolk Southern plan to submit within six months. Even with an expedited process, a decision could take up to 22 months.
Trump-era deregulation has made once-unlikely megamergers more viable. STB Chair Patrick Fuchs, appointed by Trump, has advocated for faster reviews and looser conditions on deals.
Analysts say the merger could spark a domino effect. Competitors like BNSF (owned by Warren Buffett’s Berkshire Hathaway) and CSX are already exploring their own consolidation moves, according to insiders. The STB is reportedly preparing for multiple major merger proposals in the coming months.
If both proposed megadeals are approved, the number of Class I freight railroads in North America would drop from six to just four — concentrating market power and control over key shipping routes.
The North American rail industry has been under strain from rising labor and fuel costs, volatile cargo volumes, and increasing complaints from customers about reliability — all factors that could add fuel to regulatory concerns.
The last big railroad merger, Canadian Pacific’s $31 billion takeover of Kansas City Southern in 2023, also faced strong opposition but was eventually approved, creating the only single-line rail connecting Canada, the U.S., and Mexico.
Union Pacific is currently valued at roughly $136 billion, with Norfolk Southern at about $65 billion.
Following the news, Union Pacific shares were down 3.9% and Norfolk Southern slipped 3.2% as of early afternoon Tuesday. Shares of rival CSX also dropped by 1.6%.
With input from Al Jazeera
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