Rail Giants UNP, NSC Shareholders Approve $85B Merger
Deal to create the first U.S. transcontinental railroad now faces a formidable review by the Surface Transportation Board, testing modern-era merger rules.
Shareholders of Union Pacific (UNP) and Norfolk Southern (NSC) voted overwhelmingly on Friday to approve their proposed $85 billion merger, a landmark deal aimed at creating the first single-line transcontinental railroad in U.S. history.
The approval from both companies' investors marks a critical milestone for the transaction, which would combine the two largest Class I railroads in North America to form a network spanning more than 50,000 miles across 43 states. While the shareholder vote was a key hurdle, the deal now moves to a rigorous and lengthy review by the U.S. Surface Transportation Board (STB), which holds ultimate authority over railroad consolidation.
In separate virtual meetings, nearly 99% of Norfolk Southern shareholders voted in favor, while Union Pacific investors approved the necessary share issuance with 99.5% support. The decisive outcome underscores investor confidence in the strategic vision laid out by the two rail giants.
"Our shareholders see the value and understand this merger will unlock new opportunities to enhance service, growth and innovation," Union Pacific CEO Jim Vena said following the vote. Norfolk Southern CEO Mark George called the approval a "key milestone," stating the merger will combine complementary networks to "unlock a multiplier effect for benefits to all stakeholders."
A Transcontinental Vision
The combined entity would create a dominant force in North American logistics, connecting approximately 100 ports from coast to coast. Executives project the merger will generate an estimated $2.75 billion in annual synergies, derived from $1 billion in cost savings and $1.75 billion in new revenue, much of it from converting freight currently moved by long-haul trucks.
By eliminating the need for interchanges between the two networks, the companies claim transit times for about one million annual shipments could improve by 24 to 48 hours. This efficiency is central to their pitch of creating a stronger competitor to the trucking industry, which has steadily gained market share from rail over the decades.
Norfolk Southern currently operates primarily east of the Mississippi River, with a market capitalization of approximately $63.6 billion. Union Pacific, with a market cap of over $131 billion, dominates the western two-thirds of the United States. The integration would create seamless routes for everything from agricultural products in the Midwest to consumer goods arriving at coastal ports.
The Regulatory Gauntlet
Despite the corporate enthusiasm, the deal's fate rests with the STB. The board will scrutinize the merger under its stringent 2001 rules, which require applicants to demonstrate that a consolidation would not just preserve competition but actively enhance it—a significantly higher bar than in previous eras of rail mergers.
According to federal filings, the STB’s review process can take over a year and involves extensive public commentary from shippers, labor unions, and rival railroads. Concerns have already been raised by competitors and some manufacturing and farm groups about the potential for reduced competition, leading to higher rates and diminished service in markets where shippers would have fewer options.
The last major railroad merger, Canadian Pacific's acquisition of Kansas City Southern, was approved in 2023 but was reviewed under older, less restrictive regulations because of KCS's smaller size. The UNP-NSC deal will be the first major test of the board's modern framework for a merger of this scale, which would reduce the number of Class I railroads in the U.S. from six to five.
Union Pacific and Norfolk Southern plan to file their formal application with the STB by early December, with an anticipated closing date in early 2027, should they receive regulatory approval. The path forward will be closely watched by the entire logistics sector, as the outcome could reshape the competitive landscape of American transportation for generations.