First they announced talks, now action. Union Pacific and Norfolk Southern have entered into a merger agreement that would create the first coast-to-coast railroad in the United States. If approved, the combined company will operate more than 50,000 route miles across 43 states, connecting about 100 ports and ten international interchanges across North America.
The transaction, structured as a stock and cash deal, values Norfolk Southern at USD 85 billion (approximately EUR 78.4 billion) and offers shareholders USD 320 (EUR 295) per share. Union Pacific shareholders will own roughly 73% of the merged company, while Norfolk Southern shareholders will hold 27%.
The proposed network is intended to integrate eastern and western U.S. freight operations, allowing for single-line service on long-haul routes. By removing interchange delays and introducing unified rate quotes and tracking, the merger aims to improve transit times and simplify customer logistics processes. Underserved areas, including the Ohio Valley and Mississippi River regions, are expected to gain new access routes.
Annual cost synergies are projected at USD 2.75 billion (EUR 2.5 billion), with an estimated USD 30 billion (EUR 27.7 billion) in long-term value creation for shareholders. The combined business would generate annual revenues of about USD 36 billion (EUR 33.2 billion) with EBITDA at USD 18 billion (EUR 16.6 billion) based on 2024 figures. The free cash flow is projected at USD 7 billion (EUR 6.45 billion), and the expected operating ratio would be 62%.
Operationally, Union Pacific CEO Jim Vena will lead the new entity, which will be headquartered in Omaha. Atlanta, currently Norfolk Southern’s base, will continue to serve as a technology and operations hub. The companies intend to maintain current union jobs and anticipate workforce growth in line with projected rail volume increases.
The companies plan to file a formal application with the Surface Transportation Board within six months. Pending regulatory and shareholder approvals, the transaction is targeted to close by early 2027.
