The News
Union Pacific struck an $85 billion deal for Norfolk Southern, a combination that would create the largest railroad in the United States, pending regulatory approval.
At $320 a share, it’s a roughly 25% premium to the 30-day average of Norfolk’s unaffected stock price, and comes after relatively quick negotiations between the two sides.
The combined company will be headquartered in Omaha, Nebraska, but will continue to maintain operations in Atlanta, where Norfolk is currently based.
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Jim Vena, CEO of the larger Union Pacific, will run the combined railroad, which would span more than 51,000 miles of track and employ more than 50,000 people. The deal is one of the largest this decade, beating out Microsoft’s $69 billion acquisition of Activision Blizzard and Broadcom’s $61 billion deal for VMware.
A deal would be received with an open mind by the obscure but powerful federal agency that oversees railroad deals, Semafor has previously reported, a subtle but important shift after what industry executives perceived as a don’t-even-bother approach. President Donald Trump’s unpredictable antitrust cops will still make their feelings known, and a Union Pacific-Norfolk Southern deal would likely face pushback from unions and railroad customers worried about their shipping costs going up.
And then there is the president himself: A transcontinental railroad would fit neatly with Trump’s ambitions to reindustrialize America, and could be framed as a bit of one-upsmanship with Canada, whose CPKC crosses the continent from north to south.
Notable
- Will Trump move to formalize control over a combined company, the way he did with Nippon’s deal for US Steel?
- The DOJ and FTC don’t have statutory authority over the railroads, but if history is any judge, they will be keeping a watchful eye.