Union Pacific Corporation (NYSE:UNP) announced Tuesday it will acquire rival Norfolk Southern Corporation (NYSE:NSC) in a cash-and-stock transaction valued at $320 per share, aiming to form the first transcontinental railroad in the U.S.
The offer represents a 25% premium over Norfolk Southern’s 30-day volume-weighted average price as of July 16. Following the announcement, Union Pacific shares rose 0.8% in premarket trading, while Norfolk Southern shares declined roughly 2%.
The deal values Norfolk Southern’s enterprise at approximately $85 billion, resulting in a combined railroad enterprise exceeding $250 billion.
Under the terms, Norfolk Southern shareholders will receive one share of Union Pacific stock plus $88.82 in cash for each Norfolk Southern share, giving them about 27% ownership of the merged company.
“Railroads have been an integral part of building America since the Industrial Revolution, and this transaction is the next step in advancing the industry,” said Union Pacific CEO Jim Vena.
Norfolk Southern CEO Mark George added, “It is from this position of strength that we embark on this transformational combination.”
The merger is expected to generate roughly $2.75 billion in annual synergies and create significant long-term shareholder value for both firms.
The unified railroad will connect the East and West Coasts, linking around 100 ports across North America. Both companies have committed to ensuring every union employee wishing to remain employed will have a position within the combined company.
Key goals include reducing interchange delays, opening new routes, expanding intermodal services, and shortening transit times along major rail corridors.
Union Pacific and Norfolk Southern currently invest about $5.6 billion annually in infrastructure, technology, and network growth.
Based on 2024 figures, the combined company would report revenues near $36 billion, EBITDA around $18 billion, an operating ratio of 62%, and free cash flow of $7 billion.
Jim Vena will serve as CEO of the merged entity and has pledged to stay with Union Pacific for at least five more years. The company’s headquarters will remain in Omaha, Nebraska, with Atlanta, Georgia serving as a key hub for technology, operations, and innovation.
The transaction is expected to close by early 2027.
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