Union Pacific and Norfolk Southern create transcontinental railroad

Union Pacific announced it will acquire Norfolk Southern in a stock-and-cash transaction to create “America’s first transcontinental railroad.”

• Transaction details and consideration: Union Pacific will acquire Norfolk Southern; Norfolk Southern shareholders will receive 1.0 Union Pacific common share and $88.82 in cash per NSC share, implying $320 per share and an $85 billion enterprise value for Norfolk Southern, creating a combined enterprise of over $250 billion. The deal includes issuance of ~225 million UP shares (≈27% ownership for NSC shareholders on a fully diluted basis), a $2.5 billion reverse termination fee, and expected ~$2.75 billion in annualized synergies. The cash portion will be funded with new debt and balance sheet cash; pro-forma 2024 metrics cited: $36B revenue, $18B EBITDA, $7B free cash flow, and Debt/EBITDA ~3.3x at closing.

• Path to completion, governance, and timeline: The Boards of both companies unanimously approved the agreement; the companies expect to file with the Surface Transportation Board (STB) within six months, are targeting closing by early 2027, and will host a joint investor conference call on July 29 at 8:30 a.m. ET. Leadership: Jim Vena (Union Pacific CEO) will lead the combined company and has committed to remain for at least 5 years; three Norfolk Southern directors (including Mark George and Richard Anderson) are expected to join the Union Pacific Board at closing. Other operational facts: companies invest ~$5.6 billion annually in infrastructure and cited Norfolk Southern shipping via rail avoids ~15 million tons of carbon emissions yearly.