Railroad M&A Frenzy? CSX Rises Premarket As It Reportedly Taps Advisors Amid Union Pacific–Norfolk Southern Deal Buzz

CSX stock gained 4.7% in premarket trading on Tuesday after a report said that it was in talks to bring on financial advisors, amid a rise in interest in the sector following reports that Union Pacific was exploring a possible takeover of Norfolk Southern.

According to a Reuters News report, Berkshire Hathaway’s BNSF has also enlisted Goldman Sachs as the sector gears up for the biggest merger in decades.

Late last week, The Wall Street Journal reported that Union Pacific was considering acquiring Norfolk Southern, potentially creating a $200 billion coast-to-coast railroad giant. A report stated that the talks are in an early stage and there are no guarantees that a deal will be agreed upon or that it will receive regulatory approval. A rival bidder might also emerge, the report added.

While Trump’s White House has been friendlier to large mergers compared to the previous Biden administration, the sheer size of the company, as well as the involvement of unions, will likely raise questions about the future of the potential deal.

Retail sentiment on Stocktwits about CSX was in the ‘bullish’ territory, at the time of writing, while retail chatter was ‘high.’

On Monday, TD Cowen analysts had raised the stock to “buy” from “hold” after noting that it was too early to rule out a possible merger between CSX and Union Pacific.

“We also see CSX as one of the railroads that is best set up next year for operational improvement once their two major network projects (Howard Street Tunnel and Blue Ridge Subdivision) are completed later this year,” the brokerage said, according to a MarketWatch report, after adding that a consolidation among Class I railroads was logical.

According to the Surface Transportation Board, Class I railroads generate revenue in excess of $1.07 billion. The four U.S.-based Class I carriers are Union Pacific, Norfolk Southern, CSX, and BNSF, which Berkshire acquired in 2010.

Any move featuring BNSF will be one of the first significant steps of the company as its upcoming chief, Greg Abel, looks to find footing after Warren Buffett steps down.

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