{"id":45499,"date":"2025-07-29T16:48:15","date_gmt":"2025-07-29T16:48:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/45499\/"},"modified":"2025-07-29T16:48:15","modified_gmt":"2025-07-29T16:48:15","slug":"union-pacific-and-norfolk-southern-announce-85-billion-transcontinental-railroad-deal","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/45499\/","title":{"rendered":"Union Pacific and Norfolk Southern announce $85 billion transcontinental railroad deal"},"content":{"rendered":"

OMAHA, Neb. (AP) \u2014 Union Pacific wants to buy Norfolk Southern<\/a> in a $85 billion deal that would create the first transcontinental railroad<\/a> in the U.S, and potentially trigger a final wave of rail mergers across the country.<\/p>\n

The proposed merger, announced Tuesday, would marry Union Pacific\u2019s vast rail network in the West with Norfolk\u2019s rails that snake across the Eastern United States. The combined railroad would include more than 50,000 miles of track in 43 states with connections to major ports on both coasts. <\/p>\n

The nation was first linked by rail in 1869, when a golden railroad spike was driven in Utah to symbolize the connection of East and West Coasts. Yet no single entity has controlled that coast-to-coast passage.<\/p>\n

The railroads argue a merger would streamline deliveries of raw materials and goods nationwide by eliminating delays when shipments are handed off between railroads. The AP first reported<\/a> the merger talks earlier this month a week before the railroads confirmed the discussions last week. <\/p>\n

Any deal would be closely scrutinized by antitrust regulators that have set a very high bar for railroad deals after previous consolidation in the industry led to massive backups and snarled traffic. <\/p>\n

But Union Pacific CEO Jim Vena, who would lead the combined company, said the combined company will more seamlessly get lumber from the Pacific Northwest, plastics from the Gulf and steel from Pittsburgh to their destinations. And he promised to avoid past merger mistakes.<\/p>\n

\u201cIt\u2019s great for America,\u201d Vena said. \u201cWe\u2019re going to be able to move products quicker, faster, more efficiently, better service, better for our customers in that we are going to be able to give them a product that allows them to win in the marketplace.\u201d<\/p>\n

Rail deal would have broad impact<\/p>\n

If the deal is approved, the two remaining major American railroads \u2014 BNSF and CSX \u2014 will face competitive pressure to merge as well. The continent\u2019s two other major railroads \u2014 Canadian National and CPKC \u2014 may also get involved. The Canadian rails span all of that nation and cross parts of America. CPKC rails stretch south into Mexico.<\/p>\n

Some big shippers like chemical plants in the Gulf may be wary of lessening rail competition, but Amazon and UPS may see benefits of potentially faster, more reliable delivery. They, along with unions and effected communities, will have a chance to weigh in before the U.S. Surface Transportation Board. <\/p>\n

The nation\u2019s largest rail union, SMART-TD, quickly opposed the merger over concerns of jeopardizing progress that Norfolk Southern has made in safety and labor relations since its disastrous 2023 derailment<\/a> in East Palestine, Ohio.<\/a> The union said that Union Pacific\u2019s record is troubling on safety, and treatment of workers. <\/p>\n

Railroads optimistic about chances for approval<\/p>\n

There\u2019s speculation that this deal might win approval under President Donald Trump\u2019s pro-business administration, but the STB is currently evenly split between two Republicans and two Democrats. The board is led by a Republican, and Trump will appoint a fifth member before this deal will be considered.<\/p>\n

Norfolk Southern CEO Mark George said the \u201cstars are aligned\u201d right now for this deal with railroads that have a lot of connections, and the ongoing expansion of domestic manufacturing. \u201cThen on top of that, you\u2019ve got a political situation where the administration and the STB have both changed to maybe be a little more open minded to combinations that help the country grow,\u201d he said.<\/p>\n

CFRA Research analyst Emily Nasseff Mitsch thinks the odds favor approval though the deal will face intense scrutiny.<\/p>\n

Union Pacific is offering $20 billion cash and one share of its stock to complete the deal. Norfolk Southern shareholders would receive one UP share and $88.82 in cash for each one of their shares as part of the deal that values NS at roughly $320 per share. Norfolk Southern closed at just over $260 a share earlier this month before the first reports speculating about a deal.<\/p>\n

Shares of both railroads fell more than 3% Tuesday.<\/p>\n

More consolidation could foll<\/p>\n

ow<\/p>\n

U.S. railroads have already undergone extensive consolidation since the industry was deregulated. There were more than 30 major freight railroads in the early 1980s. Today, there are only six major, or Class 1, railroads. <\/p>\n

Western rival BNSF, owned by Berkshire Hathaway, has the war chest to pursue an acquisition of CSX, to the east, if it chooses. CEO Warren Buffett<\/a> is sitting on more than $348 billion cash and the consummate dealmaker may want to swing for the fences one last time before stepping down<\/a> at year\u2019s end, as planned. <\/p>\n

Buffett downplayed reports that he had enlisted Goldman Sachs to advise him on a potential rail deal, but he rarely uses investment bankers anyway. Buffett reached an agreement to buy the parts of the BNSF railroad he didn\u2019t already own for $26.3 billion after meeting with its CEO more than a decade ago.<\/p>\n

History of problems after past rail mergers<\/p>\n

Yet there\u2019s widespread debate over whether a major rail merger would be approved by the U.S. regulators, which have established a high bar for consolidation in the crucial rail industry. <\/p>\n

That\u2019s largely due to the aftermath of industry consolidation nearly 30 years ago. A merger between Union Pacific and Southern Pacific in 1996 led to an extended period of snarled traffic on U.S. rails. Three years later, Conrail was divvied up by Norfolk Southern and CSX, creating serious backups in the East.<\/p>\n

\u201cWe\u2019re committed to making sure that doesn\u2019t happen in this case,\u201d George said. He added that the railroads will spend the next two years planning for a smooth integration before this deal might get approved. <\/p>\n

But CPKC merger was approved two years ago<\/p>\n

Two years ago, the STB approved<\/a> the first major rail merger<\/a> in more than two decades, allowing Canadian Pacific to acquire Kansas City Southern for $31 billion<\/a> to create the CPKC railroad. <\/p>\n

There were compelling factors in that deal, however. For one, it was the two smallest major freight railroads. The new railroad, regulators reasoned, would benefit trade across North America. <\/p>\n

Union Pacific and Norfolk Southern said they hope to get approval for the deal by early 2027. They expect to eliminate $1 billion in costs annually, and Vena said there should be no cost in union jobs. Revenue is also expected to jump. <\/p>\n

On Tuesday, Norfolk Southern reported a $768 million second-quarter profit as volume grew 3%, up from $737 million a year ago. Results were affected by insurance payments the East Palestine derailment and restructuring.<\/p>\n

Without the one-time factors, Norfolk Southern made $3.29 per share, just shy of the $3.31 per share that Wall Street expected. <\/p>\n","protected":false},"excerpt":{"rendered":"OMAHA, Neb. (AP) \u2014 Union Pacific wants to buy Norfolk Southern in a $85 billion deal that would…\n","protected":false},"author":2,"featured_media":45500,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[12300,728,28,12,35995,9092,793,681,851,35994,35990,14007,35991,2806,12657,17000,35992,795,17001,35993,3324,724],"class_list":{"0":"post-45499","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-amazon-com","9":"tag-berkshire-hathaway","10":"tag-business","11":"tag-donald-trump","12":"tag-emily-nasseff-mitsch","13":"tag-ga-state-wire","14":"tag-general-news","15":"tag-georgia","16":"tag-inc","17":"tag-jim-vena","18":"tag-mark-george","19":"tag-mergers-and-acquisitions","20":"tag-ne-state-wire","21":"tag-nebraska","22":"tag-norfolk","23":"tag-norfolk-southern-corp","24":"tag-the-goldman-sachs-group","25":"tag-u-s-news","26":"tag-union-pacific-corp","27":"tag-united-parcel-service","28":"tag-utah","29":"tag-warren-buffett"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/45499","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=45499"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/45499\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/45500"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=45499"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=45499"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=45499"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}