Union Pacific and Norfolk Southern Explore Merger

Union Pacific Corp. is reportedly in early-stage talks to acquire Norfolk Southern Corp., a potential deal that could reshape North American freight rail by creating the first true coast-to-coast Class I railroad.

The Wall Street Journal broke the news Thursday evening, citing unnamed sources familiar with the matter. The companies have not publicly confirmed the negotiations.

“We do not comment on rumors or speculation,” a Union Pacific spokesperson said. Norfolk Southern did not respond to media inquiries.

A Coast-to-Coast Rail Giant

If successful, the merger would bring together the largest U.S. rail carrier in the West with one of the biggest Eastern carriers, forming a transcontinental freight network of unmatched scale.

• Union Pacific: Based in Omaha, operates 32,000 miles of track across 23 Western states, with a market cap of $135.9 billion.
• Norfolk Southern: Headquartered in Atlanta, spans 36,000 track miles in 22 states, valued at $60.3 billion.
• Combined, the two carriers employ over 60,000 people and dominate key industrial corridors.

The last significant U.S. rail merger occurred in 1999, when NS and CSX split Conrail. The most recent cross-border consolidation was the Canadian Pacific–Kansas City Southern merger finalized in 2023, creating CPKC.

Market Movement and Strategic Signals

Shares of Norfolk Southern rose 2.55% after-hours following the report, building on a 3.65% gain during the trading day. Union Pacific’s stock fell 1.6% during the day and another 0.71% post-market. Rival CSX was also impacted, rising 3.73% before sliding 1.16% in after-hours trading.

The merger talk follows increased Wall Street interest in Class I consolidation after Donald Trump’s 2024 re-election, which came with pledges of regulatory rollbacks and a pro-business agenda.

“There’s renewed optimism that the Surface Transportation Board (STB) could soften its stance on Class I mergers with a more conservative leadership,” analysts noted.

While Union Pacific CEO Jim Vena has voiced support for further consolidation, other executives have warned that post-2001 STB rules pose serious challenges to merger approvals.

Regulatory Path Remains Uncertain

The Surface Transportation Board, the regulatory body overseeing rail mergers, remains a key variable. Its current four-member panel is evenly split, but a fifth seat expected to be filled in 2026 by a Republican appointee could tilt the balance toward more permissive oversight.

Investment firms tracking the developments suggest a strategically framed, politically supported merger proposal could gain traction — though STB scrutiny remains likely.

If this deal advances, it could mark the final phase of U.S. rail consolidation, combining east and west under one corporate umbrella, reshaping freight flows for decades to come.

Source: FreightWaves