Market Matters Blog

Union Pacific Corporation (NYSE: UNP) and Norfolk Southern Corporation (NYSE: NSC) on July 29 announced an agreement to create America's first transcontinental railroad.

The boards of directors of both UP and NS unanimously approved the merger, which is subject to review and approval by the Surface Transportation Board (STB) within its statutory timeline, customary closing conditions, and shareholder approval. The companies are targeting to close the transaction by early 2027.

The UP and NS expect to file their application with the STB within six months. In that application, the companies will describe how the combined rail network will provide safer, faster, and more reliable service and increased competition to a broad range of stakeholders.

STATEMENTS FROM UP, NS

A news release on the UP website, stated: "Under the terms of the agreement, Union Pacific will acquire Norfolk Southern in a stock and cash transaction, implying a value for Norfolk Southern of $320 per share based on Union Pacific's unaffected closing stock price on July 16, 2025, and representing a 25% premium to Norfolk Southern's 30-trading day volume weighted average price on July 16, 2025. The value per share implies an enterprise value of $85 billion for Norfolk Southern, resulting in the creation of a combined enterprise of over $250 billion."

Union Pacific CEO Jim Vena said: "Railroads have been an integral part of building America since the Industrial Revolution, and this transaction is the next step in advancing the industry. Imagine seamlessly hauling steel from Pittsburgh, Pennsylvania, to Colton, California, and moving tomato paste from Huron, California, to Fremont, Ohio. Lumber from the Pacific Northwest, plastics from the Gulf Coast, copper from Arizona and Utah, and soda ash from Wyoming. Right now, tens of thousands of railroaders are moving almost everything we use. You name it, and at some point, the railroad hauled it."

"Norfolk Southern, like Union Pacific, is a railroad integral to the U.S. economy, with a storied 200-year legacy of serving customers across 22 states in the eastern half of the nation," said Mark George, CEO of Norfolk Southern. "Our safety, network, and financial performance is among the best we've had as a company, as is our customer satisfaction. And it is from this position of strength that we embark on this transformational combination. We are confident that the power of Norfolk Southern's franchise, diversified solutions, high-quality customers and partners, as well as skilled employees, will contribute meaningfully to America's first transcontinental railroad, and to igniting rail's ability to deliver for the whole American economy today and into the future. Union Pacific is a true partner that shares our belief in rail's ability to deliver for all stakeholders simultaneously, and we are excited for our future together."

NATIONAL GRAIN AND FEED WEIGHS IN

The National Grain and Feed Association (NGFA) said in a news release that it will undertake an extensive evaluation of the proposed merger to better understand its implications for our industry.

"About 3.2 million rail cars of grains, oilseeds and other agricultural products move by rail on an annual basis, representing more than 10% of all rail shipments, and 26% of grain has at least one rail movement," said NGFA President and CEO Mike Seyfert. "It is an important partnership between America's rail carriers and NGFA's hundreds of members that help to deliver and Transform America's Harvest into the bounty that feeds and fuels the country and the world."

"NGFA looks forward to hearing from the Union Pacific and Norfolk Southern railroads and learning how they believe the merger will create resilient and reliable efficiencies and incentives in timeliness of service and deliveries -- along with fair and reasonable rates to better serve our members," added Seyfert. "NGFA will also undertake extensive analysis and discussions with our members to determine the impact on cost and competitiveness for American agriculture."

Here is a link to the full news release: https://www.up.com/….

Mary Kennedy can be reached at mary.kennedy@dtn.com

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