Union Pacific to acquire Norfolk in $ 85 billion US Railway Agreement: all about mega merger | Today news

Union Pacific Corp has agreed to acquire Norfolk Southern Corp. in a $ 85 billion in a cash and purchase transaction. The agreement will create a transcontinental rail giant connecting Union Pacific’s extensive Western US Network to Norfolk Southern’s east coastal routes. If approved, the agreement would be the biggest buy -out in the industry. Deal details and valuation Norfolk Southern shareholders will receive one Union Pacific share and $ 88.82 cash for each Norfolk share. Union Pacific will issue approximately 225 million shares to Norfolk Southern Investors, representing 27% in the combined company. The agreement, which the companies aim to close in early 2027, implies a $ 320 per share for Norfolk, or about $ 72 billion on an equity base. This would represent a approximately 23% premium for Norfolk Southern’s stock before the first reports of a potential agreement this month. The equity response The shares of Norfolk, which also reported quarterly results on Tuesday, dropped 2.6% from 07:44 before the regular trading in New York. Union Pacific has risen less than 1%. At current levels, the businesses would have a joint market value of about $ 200 billion. Regulatory barriers Despite the boards of both companies approving the transaction, the transaction faces significant regulatory investigations, which are generally considered in rail reductions. Historically, the mergers of the railway were difficult to complete given the inhospitable regulatory environment. The agreement will increase competitive pressure on opponents, including CSX Corp. and Berkshire Hathaway Inc. BNSF to possibly practice their own transactions to keep up. The companies have announced that they were advanced on July 24. This followed the speculation of weeks that the railroad industry was on its way to another round of consolidation, fueled by the assumption that President Donald Trump’s administration could take a more competent view to major transactions than previous administrations. The agreement is structured without a voting trust and includes a $ 2.5 billion break if it does not continue. Advisors behind Mega Deal Bofa Securities serve as financial adviser to Norfolk Southern, while Wachtell Lipton Rosen & Katz is legal advisor, with Sidley Austin providing legal advice on regulatory matters. Morgan Stanley & Co. and Wells Fargo serves as financial advisors for Union Pacific. Skadden ARPS Slate Meagan & Flom serves as a legal adviser to Union Pacific, with Covington & Burling providing legal advice on regulatory matters. Competition on the rise, although Railways carry about 28% of all US cargo and 40% of the country’s long -distance freight, the growth of the industry is still stagnating amid rising competition from trucks. The Trump administration antitrust handshafts must report on any combination to further concentrate an industry that won up to just six so-called Class 1 Freight Railways. The last major agreement was concluded in 2023, when Canadian Pacific Ocean acquired Kansas City Southern in a transaction worth about $ 31 billion. The latest merger comes a year after a dramatic activist struggle in Norfolk Southern and an exposition of its former CEO.