Union Pacific to acquire Norfolk in $85-billion US railway deal

The deal will create a transcontinental rail giant, linking Union Pacific's extensive western US network with Norfolk Southern's East Coast routes.

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Union Pacific to acquire Norfolk in $85-billion US railway deal

Union Pacific Corp agreed to acquire Norfolk Southern Corp in a cash-and-stock transaction valued at $85 billion.

The deal will create a transcontinental rail giant, linking Union Pacific's extensive western US network with Norfolk Southern's East Coast routes.

If approved, the deal would be the largest-ever buyout in the industry.

Norfolk Southern shareholders will receive one Union Pacific share and $88.82 in cash for each Norfolk share.

Union Pacific will issue about 225 million shares to Norfolk Southern investors, representing 27% stake in the combined company.

The agreement, which the companies aim to close by early 2027, implies a value of $320 a share for Norfolk, or about $72 billion on an equity basis.

That would represent a roughly 23% premium to Norfolk Southern’s stock before the first reports of a potential deal this month.

The shares of Norfolk, which also reported quarterly results on Tuesday, declined by 2.6% as of 7:44 am before regular trading in New York.

Union Pacific rose less than 1%. At current levels, the companies would have a combined market value of about $200 billion.

Despite the boards of both companies approving the transaction, the deal faces significant regulatory scrutiny, which is deemed common in rail mergers. Historically, rail mergers have been difficult to consummate given the inhospitable regulatory environment.

The deal will raise competitive pressure on rivals, including CSX Corp. and Berkshire Hathaway Inc.’s BNSF to potentially pursue deals of their own to keep pace.

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