Union Pacific Buys Norfolk Southern

Union Pacific Corp. and Norfolk Southern Corp. announced an agreement to create America’s first transcontinental railroad. The companies will seamlessly connect more than 50,000 route miles across 43 states from the East Coast to the West Coast, linking approximately 100 ports and nearly every corner of North America. 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, according to  the companies. 

“Railroads have been an integral part of building America since the Industrial Revolution, and this transaction is the next step in advancing the industry,” comments Jim Vena, Union Pacific CEO, referencing the new Union Pacific Transcontinental Railroad.

The Union Pacific Transcontinental Railroad will decrease highway congestion, reducing wear-and-tear on taxpayer-funded roads. Union Pacific and Norfolk Southern invest approximately $5.6 billion annually in infrastructure, innovation, and network expansion.

“Norfolk Southern, like Union Pacific, is a railroad integral to the U.S. economy, with a storied 200-year legacy of serving customers across 22 states in the eastern half of the nation,” says Mark George, CEO, Norfolk Southern. “Our safety, network, and financial performance is among the best we’ve had as a company, as is our customer satisfaction. And it is from this position of strength that we embark on this transformational combination.”

 U.S. freight railroads move approximately 1.5 billion tons of material and goods every year. The combination will unlock rail options for shippers in regions where railroad connections are less efficient, such as the Ohio Valley and on both sides of the Mississippi River (“watershed” markets), creating a more accessible, sustainable, and lower-cost supply chain for manufacturers and consumers.

With access to 10 international interchanges and approximately 100 ports, the Union Pacific Transcontinental Railroad will unlock strong international trade routes and offer greater access to U.S.-made goods.

The combination will improve transit times, removing several days by eliminating car touches and interchanges where rail cars are handed off. Customers will have the ability to quickly receive single-line rate quotes with one system to track freight, enabling real-time decisions that optimize supply chains.

Short lines and their shippers will have access to a unified rail network with a single Class I interface, new services, and reduced gateway delays. U.S. ports served by the transcontinental railroad will have expanded reach and faster access to new markets. 

The Board of Directors of both Union Pacific and Norfolk Southern unanimously approved the transaction, which is subject to STB review and approval within its statutory timeline, customary closing conditions, and shareholder approval. The companies are targeting closing the transaction by early 2027.  

Under the terms of the agreement, Norfolk Southern shareholders will receive 1.0 Union Pacific common share and $88.82 in cash for each share of Norfolk Southern. The implied value of $320 per share represents an implied total enterprise value for Norfolk Southern of $85 billion. Union Pacific will issue a total of approximately 225 million shares to Norfolk Southern shareholders, representing 27% ownership in the combined company. 

Based on 2024 results, the pro-forma combined company would have revenues of approximately $36 billion, EBITDA of approximately $18 billion, operating ratio of 62%, and free cash flow of $7 billion. 

The combined company will be headquartered in Omaha, Neb. Atlanta, Ga. will remain a core location for the combined organization over the long-term with a focus on technology, operations, and innovation, among other priorities.