Union Pacific, Norfolk Southern merge to create first transcontinental railroad

Railroad companies Union Pacific Corp. and Norfolk Southern Corp. have merged to create America’s first transcontinental railroad.

Eastern-based Norfolk Southern spans 22 states while Union Pacific operates in 23 states, spanning much of the western two-thirds of the country. 

Combined, they will serve 43 states, linking roughly 100 ports and connecting 50,000 route miles from the country's East and West coasts, according to the press release announcing the agreement.

The industrial railroads say the meager will transform the U.S. supply chain and economy, strengthen domestic manufacturing and preserve union jobs.

“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 Union Pacific Chief Executive Officer Jim Vena.

“Imagine seamlessly hauling steel from Pittsburgh, Pennsylvania to Colton, California and moving tomato paste from Huron, California to Fremont, Ohio. Lumber from the Pacific Northwest, plastics from the Gulf Coast, copper from Arizona and Utah, and soda ash from Wyoming. Right now, tens of thousands of railroaders are moving almost everything we use. You name it, and at some point, the railroad hauled it.”

The press release highlights some transactional details within the agreement: Union Pacific will acquire Norfolk Southern in a stock and cash transaction and that "the value per share implies an enterprise value of $85 billion for Norfolk Southern, resulting in the creation of a combined enterprise of over $250 billion."

Still, the deal is expected to take years to finalize.

The companies will file an application with the Surface Transportation Board within the next six months. The application will contain a description from the companies as to “how the combined rail network will provide safer, faster, and more reliable service and increased competition to a broad range of stakeholders.”

Norfolk Southern President and CEO Mark George wrote in a letter to employees:“Formal approvals are likely to take two years to realize, but once we come together, we will be able to eliminate freight handoffs, offering more cost-effective shipping, reducing highway congestion, and expanding access to underserved regions. We’re building a stronger, more connected America.”

By connecting the country through rail, this arrangement will allow competition with truck-transportation, creating a decrease in highway congestion and wear and tear on American roads.

“Union Pacific and Norfolk Southern are two of the strongest-operating railroads, with a combined 360 years of history. The Norfolk Southern team is known as the Thoroughbreds with a history that dates to 1827 – 35 years older than Union Pacific. Their team has been on a solid trajectory of delivering strong results. I am honored and excited that if approved, the Thoroughbreds will join us in Building America becoming a part of Union Pacific,” Vena said in his letter to employees.