Norfolk Southern, Union Pacific to create America's first transcontinental railroad

Union Pacific along with Norfolk Southern announced an agreement to create America's first transcontinental railroad.

According to a press release from Union Pacific, this railroad will connect over 50,000 route miles across 43 states from the East Coast to the West Coast, linking approximately 100 ports and nearly every corner of North America.

Under the terms of this agreement, Union Pacific will acquire Norfolk Southern in a stock and cash transaction, implying a value for Norfolk Southern of $320 per share based on Union Pacific's unaffected closing stock price on July 16, and representing a 25% premium to Norfolk Southern's 30-trading-day volume weighted average price on July 16.

The value per share implies an enterprise value of $85 billion for Norfolk Southern, resulting in a combined enterprise value of over $250 billion. 

Norfolk Southern's Board of Directors unanimously approved the transaction, which is subject to Surface Transportation Board (STB) review and approval within its statutory timeline, customary closing conditions and shareholder approval.

The press release describes the railroad as a "truck-competitive solution," stating that it will reduce highway congestion and reduce wear and tear on public roadways.

Additionally, the companies promise a faster, more comprehensive freight service that eliminates interchange delays, opens new routes, expands intermodal services and reduces distance and transit time on key rail corridors.

Union Pacific and Norfolk Southern expect to file their application with the STB within six months, and the companies are looking to close the transaction by early 2027.