Union Pacific Eyes $60 Billion Norfolk Southern In Railroad Mega-Merger

Union Pacific Corp. UNP is in early-stage discussions to acquire Norfolk Southern Corp. NSC, sources said Thursday, in what would amount to a major merger within the railroad industry. 

The Details: The talks are preliminary, according to the Wall Street Journal, and there is no guarantee that an agreement will be reached or ultimately win approval from regulators. 

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Union Pacific currently has a market value of about $140 billion, while Norfolk Southern is valued at around $60 billion. 

Following news of the negotiations, shares of Norfolk Southern rose by 4% in after-hours trading, while Union Pacific’s stock fell roughly 2% before reversing to a slight gain. 

Why It Matters: If completed, a deal would create an extensive rail system spanning the country and controlling a significant share of U.S. freight transport. At present, no railroad company offers a network that connects the east and west coasts across the U.S.

Union Pacific CEO Jim Vena has spoken positively about the idea of a transcontinental rail network, noting that it could enhance service by reducing delays that currently occur when railcars are transferred between different operators.

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