Union Pacific Confirms Merger Talks With Rival Norfolk Southern To Create A Transcontinental Railroad Behemoth

Union Pacific Corp. (UNP) announced on Thursday that it has kick-started merger talks with rival Norfolk Southern Corp. (NSC). The deal, if it goes through, would create a transcontinental railroad giant.

Union Pacific’s shares fell over 2% in Thursday’s opening trade, while Norfolk Southern’s stock gained more than 3% at the time of writing.

A Union Pacific-Norfolk Southern merger would be the largest such deal in the railroad sector, according to a Reuters report.

UNP stock is down 0.32% year-to-date, while the NSC stock is up more than 22% for the year.

While confirming that the merger talks are in advanced stages, Union Pacific noted that it cannot assure that an agreement will be reached.

Union Pacific’s current market capitalization stood at a little over $136 billion at the time of writing, while Norfolk’s stood at approximately $65 billion.

This comes days after Warren Buffett denied reports that Berkshire Hathaway-owned (BRK) BNSF had teamed up with Goldman Sachs Inc. (GS) to acquire a rival, following media reports that Union Pacific was exploring the acquisition of Norfolk Southern.

He stated that no one from Goldman Sachs had spoken to him or his successor, Greg Abel, regarding this matter. He also added that he would not seek advice from external bankers on deals.

Berkshire acquired BNSF in 2010 in a deal valued at $26.5 billion, acquiring 77.4% of the railroad company – it already owned a 22.6% stake before the deal.

BNSF operates in 28 states in the U.S., apart from three Canadian provinces. It has a total of 32,500 route miles and employs over 36,000 people.

UNP stock is down 0.32% year-to-date, while the NSC stock is up more than 22% for the year.

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