Union Pacific to Buy Norfolk Southern in $85 Billion Deal
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Union Pacific Corp. agreed to acquire Norfolk Southern Corp. in a cash-and-stock transaction valued at $85 billion, forming a transcontinental rail behemoth in what stands to be the industry’s largest deal ever.
Norfolk Southern shareholders will receive one Union Pacific share and $88.82 in cash for each Norfolk share, the companies said in a statement July 29. Union Pacific will issue about 225 million shares to Norfolk Southern investors, representing 27% ownership in the combined company.
The deal, which they aim to close by early 2027, implies a value of $320 a share for Norfolk, or about $72 billion on an equity basis, confirming an earlier Bloomberg News. That would represent a roughly 23% premium to Norfolk Southern’s stock before the first reports of a potential deal this month.
Shares of Norfolk, which also reported quarterly results July 29, fell 2.6% as of 7:44 a.m. before regular trading in New York. Union Pacific rose less than 1%. At current levels, the companies would have a combined market value of about $200 billion.
The tie-up is poised to transform the North American rail market, marrying Union Pacific’s network across the western US with Norfolk’s East Coast routes. While regulatory approval remains a hurdle for any rail merger, the agreement raises competitive pressure on rivals including CSX Corp. and Berkshire Hathaway Inc.’s BNSF to potentially pursue deals of their own to keep pace.
“Realizing the promise of the Union Pacific Transcontinental Railroad will not be easy,” Union Pacific CEO Jim Vena said in aletterto employees. “It is our expectation that the combination will lead to job growth and it is our intention to preserve Union Pacific and Norfolk Southern union jobs.”
The companiesannouncedthat they were in advanced talks on July 24. That followed weeks of speculation that the railroad industry was headed for another round of consolidation, fueled by the assumption that President Donald Trump’s administration could take a more amenable view to major deals than previous administrations.
“We’ve done a lot of homework to get us to this place,” Vena told analysts after the talks were announced. He will lead the combined company and has pledged to remain in place for at least five years.
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