Union Pacific will merge with Norfolk Southern to form the first U.S. transcontinental railroad

Union Pacific announced Tuesday it is acquiring Norfolk Southern in a new $85 billion deal that will merge the two companies, which also plan to build the first transcontinental railroad in the U.S. 

The new railroad — called the Union Pacific Transcontinental Railroad — will run over 50,000 miles across 43 states from the East Coast to the West Coast while linking about 100 ports, a release said. 

The companies said that this new railroad will help U.S. shippers by “eliminating interchange delays, opening new routes, expanding intermodal services, and reducing distance and transit time on key rail corridors.” They called it a more “truck-competitive solution” because the railroad will help decrease traffic. 

“This combination will transform the U.S. supply chain, unleash the industrial strength of American manufacturing, and create new sources of economic growth and workforce opportunity that preserves union jobs,” the release said. 

However, SMART Transportation Division, a transportation labor union, said in a statement that it opposes the merger, citing skepticism around the impact it could have on workers, safety, and service quality, among others.

Union Pacific is buying Norfolk Southern in a stock and cash transaction with an apparent share value of $320 based on Union Pacific’s closing stock price from July 16 and showing a “25% premium to Norfolk Southern’s 30-trading day volume weighted average price” on the same day. The companies said that, once merged, the railroad companies will be valued over $250 billion combined. 

The firms added they expect this merger to bring more than $30 billion of “potential value creation” through an estimated $2.75 billion in annualized synergy. 

Next up, the companies plan to file an application with the Surface Transportation Board within the next six months. They said they plan to close this transaction by early 2027.