Feature, Freight News, Rail

UP, NS to Create US Transcontinental Railroad

[ August 7, 2025   //   Gary Burrows ]

Union Pacific Corp. and Norfolk Southern Corp. on July 29 announced an agreement to create the first U.S. transcontinental railroad, connecting more than 50,000 route miles across 43 states from the East Coast to the West Coast, linking about 100 ports within it’s the combined network.

Named the Union Pacific Transcontinental Railroad, the proposed merger 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.

Under the terms of the agreement, Union Pacific will acquire Norfolk Southern in a stock and cash transaction, implying a value for Norfolk Southern of US$320 per share based on Union Pacific’s unaffected closing stock price on July 16, and representing a 25 percent premium to Norfolk Southern’s 30-trading day volume weighted average price, also on July 16. The value per share implies an enterprise value of US$85 billion for Norfolk Southern, resulting in the creation of a combined enterprise of more than US$250 billion. It is also expected to unlock about US$2.75 billion in annualized synergies.

“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 Jim Vena, Union Pacific CEO

The Union Pacific Transcontinental Railroad will connect people, strengthen communities, and build a stronger, more competitive America.

The railroads said they envision every union employee who wants a job in the combined company will have one. The combined company will deliver faster, more comprehensive freight service to U.S. shippers by eliminating interchange delays, opening new routes, expanding intermodal services, and reducing distance and transit time on key rail corridors.

A more truck-competitive solution, the Union Pacific Transcontinental Railroad will decrease highway congestion, reducing wear-and-tear on taxpayer-funded roads. Today, Union Pacific and Norfolk Southern invest about US$5.6 billion annually in infrastructure, innovation, and network expansion.

“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.

“We are confident that the power of Norfolk Southern’s franchise, diversified solutions, high-quality customers and partners, as well as skilled employees, will contribute meaningfully to America’s first transcontinental railroad, and to igniting rail’s ability to deliver for the whole American economy today and into the future,” said Mark George, CEO of Norfolk Southern.

The railroads, which move about 1.5 billion tons of material and goods each year, say they will be able to compete more effectively with Canadian railroads, NS said. The merger will provide more rail options for shippers in regions where rail connections are less efficient, such as the Ohio Valley and both sides of the Mississippi River.

With access to 10 international interchanges and about 100 ports, the merged railroads will unlock strong international trade routes and offer greater access to U.S.-made goods, the railroads said.

Customers will benefit from single-line service across the U.S., with improved transit times removing several days and eliminating multiple hand-offs and handling.

Short lines 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, NS said.

The proposed merger will require Surface Transportation Board approval. The companies expect to file their application with the STB within six months. The boards of directors of Union Pacific and Norfolk Southern unanimously approved the transaction, and the companies are targeting closing the transaction by early 2027.

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

Jim Vena, Union Pacific CEO, will lead the combined company as CEO, and has committed to at least five years. At closing, three Norfolk Southern directors, including Mark George and Richard Anderson, are expected to join the Union Pacific board after completing the corporate governance process.

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

Tags: Norfolk Southern Corp., U.S. Surface Transportation Board, Union Pacific Corp.