Shareholders of Union Pacific, Norfolk Southern support US$85 billion rail merger

A Union Pacific freight train travels along the tracks April 17, 2025, in Eloy, Ariz. (AP Photo/Ross D. Franklin, File)

OMAHA, Neb. — Shareholders of Union Pacific and Norfolk Southern backed the railroads’ proposed US$85 billion merger to create the nation’s first coast-to-coast rail network.

Roughly 99 per cent of both railroads’ shareholders voted to support the largest rail merger in history Friday, but the U.S. Surface Transportation Board must still approve it before the deal can be completed.

Union Pacific CEO Jim Vena said, “Our shareholders see the value and understand this merger will unlock new opportunities to enhance service, growth and innovation.”

Vena has said that he hopes to file the formal merger application either in late November or early December, and that will initiate the lengthy review process.

The merger has picked up the support of the largest rail union and hundreds of shippers, but chemical manufacturers and competing railroad BNSF have raised concerns about whether the merger would hurt competition and lead to higher rates. U.S. President Donald Trump said after meeting with Vena in the Oval Office that the deal sounds good to him.

Vena has argued that the merger is great for America because it would enable the railroad to deliver goods more quickly and help the companies that rely on its deliveries of raw materials and finished products.

The proposed merger announced this summer was designed to link Union Pacific’s vast rail network in the West with Norfolk’s rails that crisscross the Eastern United States. The combined railroad would include more than 50,000 miles of track in 43 states with connections to major ports on both coasts.

The railroads argued that this merger would streamline deliveries of raw materials and goods nationwide by eliminating delays when shipments are handed off between railroads.

The STB will closely scrutinize the merger to determine if it can meet the very high bar the board established for railroad deals after previous consolidation in the industry led to massive backups and snarled traffic.

A group of nine Republican attorneys general sent a letter to the STB Friday urging regulators to thoroughly review the deal because they are concerned about the potential impact because higher shipping costs could “kneecap American companies’ ability to compete with foreign manufacturers.” Earlier this month, a bipartisan group of 18 U.S. senators made a similar request to the board.

“We write to express our concerns that the proposed merger between Union Pacific and Norfolk Southern will result in undue market concentration that stifles competition and therefore creates higher prices, lower reliability, and less innovation at the expense of America’s manufacturers and, ultimately, America’s consumers,” the attorneys general wrote.

Many investors believe that if the deal is approved, CSX will need to find a merger partner so it will be able to compete effectively. But the other major railroads -- BNSF, CPKC and Canadian National -- have all said they believe forging cooperative agreements between railroads makes more sense than a merger. But CSX still went out and hired a new CEO with a background in mergers this fall to lead their railroad.

Vena and Norfolk Southern CEO Mark George have both said they are optimistic that this deal will get approved under Trump’s pro-business administration. The Surface Transportation Board is supposed to be independent, but Trump fired the only board member who opposed Canadian Pacific’s acquisition of Kansas City Southern railroad two years ago. That should allow Trump to appoint two new members of the five-person board although Robert Primus has sued to challenge his firing.

Union Pacific offered US$20 billion cash and one share of its stock to complete the deal. Norfolk Southern shareholders would receive one UP share and US$88.82 in cash for each one of their shares as part of the deal that values NS at roughly US$320 per share. Norfolk Southern closed at just over US$260 a share earlier this month before the first reports emerged speculating about the deal that includes a US$2.5 billion breakup fee.

Josh Funk, The Associated Press