Union Pacific has made a stock and cash offer of roughly USD85 billion for fellow North American railroad operator Norfolk Southern. The combined entity would control a rail system that spans the USA from California to the East Coast.
The deal values Norfolk Southern at USD320 per share, based on Union Pacific’s stock price before the merger was announced – a 25 percent premium over Norfolk Southern’s average share price over the past 30 trading days. The combined company would be worth over USD250 billion.
The rationale behind the merger is to open new routes and expand access for customers, unlocking opportunities for faster, more reliable transit times and provide a more seamless customer experience. The companies expect to realise USD2.75 billion in annualised synergies.
There has been some pushback to the deal, however, with various shipper associations and railway operators voicing opposition, according to the Financial Times. The deal is subject to approval by the Surface Transportation Board. Union Pacific and Norfolk Southern aim to close the deal by early 2027.
