Union Pacific Reaches Deal With Canadian National Over Norfolk Southern Merger

Union Pacific reached an agreement with Canadian National to secure its support for a proposed $85 billion acquisition of Norfolk Southern. The merger aims to create the first transcontinental railroad in the United States, which would control over 40% of all rail traffic and reduce the number of major freight railroads to five.

To secure the agreement, Union Pacific offered concessions including granting Canadian National increased network access in the U.S. Midwest and permission to serve customers with reduced shipping options. The deal also involves transferring ownership of smaller railroads and key rail yards in Kansas City and St. Louis to Canadian National.

The merger remains subject to approval from the Surface Transportation Board, which previously rejected an amended application in May for lacking key information. The agency is reviewing the proposal under a 2001 standard requiring mergers to be in the public interest and to enhance competition.

While Union Pacific and Norfolk Southern claim the merger will reduce costs, the deal faces opposition from BNSF, CPKC, and CSX. Shippers are divided; some anticipate faster deliveries, while those in the agriculture and chemical sectors fear service disruptions and rate hikes due to the unprecedented market power a single railway would hold.