A planned US$72 billion merger between two of the largest United States railroads, Union Pacific (UNP) and Norfolk Southern (NS) will create America’s first transcontinental freight railroad.
The deal is understood to reflect the vital role U.S. freight railroads play in America’s economy, carrying around 30% of the nation’s freight in terms of weight, according to the Bureau of Transportation Statistics.
These two legendary companies plan to seamlessly connect over 50,000 route miles across 43 states from the East Coast to the West Coast, linking approximately 100 ports and nearly every corner of North America.
While Union Pacific serves the western U.S., Norfolk Southern serves the eastern parts of the country.
Based on industry speculation, the coast-to-coast nexus between these two operators could force the other two major freight railroads, Burlington Northern Sante Fe, a unit of Berkshire Hathaway, and CSX Corp., to also merge to remain competitive.
Assuming Burlington and CSX Corp do merge, it would leave the U.S. with only two major freight railroads moving goods east-to-west.
Meanwhile, given that the Union Pacific/Norfolk Southern merger deal adds to decades of consolidation within the sector, it is expected to serve as a serve as a major test for the Trump administration’s antitrust regulators.
At face value, the Trump administration appears to be more willing than the Biden administration to approve mergers in certain industries, despite reducing significant market competition.
Despite concerns that any merger could result in service problems and supply chain disruptions, the two railroads have vowed that the deal would benefit all customers.
“Imagine seamlessly hauling steel from Pittsburgh, Pennsylvania to Colton, California and moving tomato paste from Heron, California to Fremont, Ohio. Lumber from the Pacific Northwest, plastics from the Gulf Coast, copper from Arizona and Utah, and soda ash from Wyoming,” said Union Pacific CEO Jim Vena.
While industry insiders expect the merger to eventually be approved, they expect the approvals process - including antitrust regulators and other bodies, like the Surface Transportation Board - to take months, if not years to complete.
In 2023, the Surface Transportation Board approved the first major railroad merger in more than two decades when Canadian Pacific purchased Kansas City Southern, creating a direct freight line from Canada through the United States to Mexico.
The deal was approved, in part, due to the combined companies having little to no overlapping routes, which is the case with Union Pacific and Norfolk Southern.
Under the terms of the Union Pacific/Norfolk Southern agreement, Union Pacific will acquire Norfolk Southern in a stock and cash transaction, implying a value for Norfolk Southern of US$320 per share based on Union Pacific’s unaffected closing stock price on 16 July, 2025.
This represents a 25% premium to Norfolk Southern’s 30-day trading day volume weighted average price on 16 July, 2025.
The value per share implies an enterprise value of US$85 billion for Norfolk Southern, resulting in the creation of a combined enterprise of over US$250 billion.
