Norfolk Southern Corporation (NYSE:NSC) saw its stock rise 3.4% following confirmation that it is in “advanced discussions” with Union Pacific Corporation (NYSE:UNP) about a possible merger. Meanwhile, Union Pacific shares slipped 1%, and competitor CSX Corporation (NASDAQ:CSX) gained 3.3% on the news.
The announcement from both companies validates media reports from the previous week, including a Wall Street Journal article revealing talks between the two leading U.S. railroads.
In a concise joint statement, the firms said they are exploring a potential merger but warned, “there can be no assurances as to whether an agreement for a transaction will be reached or as to the terms of any such transaction.”
Norfolk Southern and Union Pacific also indicated they do not plan to provide further updates or comments unless legally required or deemed appropriate.
Such a merger would face intense regulatory examination, as it would combine two of the nation’s largest freight rail systems. Norfolk Southern’s operations focus mainly on the Eastern U.S., while Union Pacific covers the Western regions.
Consolidation pressures have increased within the railroad sector as companies look to boost efficiency and expand their networks. Approval from the Surface Transportation Board, the federal regulator for freight rail, would be necessary for any deal to move forward.
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