Union Pacific To Acquire Norfolk Southern In $320/shr Cash And Stock Deal

Norfolk Southern

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(RTTNews) - Union Pacific Corp. (UNP) and Norfolk Southern Corp. (NSC) announced Tuesday an agreement to create America's first transcontinental railroad.

Union Pacific will acquire Norfolk Southern in a cash and stock transaction, implying a value for Norfolk Southern of $320 per share, based on Union Pacific's unaffected closing stock price on July 16, 2025.

Norfolk Southern shareholders will receive $88.82 in cash and 1.0 Union Pacific common share for each share of Norfolk Southern. The cash portion of the transaction will be funded through a combination of new debt and balance sheet cash.

Union Pacific will issue a total of approximately 225 million shares to Norfolk Southern shareholders, representing 27% ownership in the combined company on a fully diluted basis.

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

The combined company will seamlessly 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.

The combined company will deliver faster, more comprehensive freight service to U.S. shippers by eliminating interchange delays, opening new routes, expanding intermodal services, and reducing distance and transit time on key rail corridors.

Union Pacific and Norfolk Southern shareholders are expected to realize significant value from the transaction, including more than $30 billion of potential value creation through the expected achievement of approximately $2.75 billion in annualized synergy opportunity.

The transaction is expected to be accretive to Union Pacific's adjusted EPS per share in the second full year after closing and rising to high single digit accretion thereafter.

The Board of Directors of both Union Pacific and Norfolk Southern unanimously approved the transaction, which is subject to STB review and approval within its statutory timeline, customary closing conditions, and shareholder approval.

The companies are targeting closing the transaction by early 2027. The agreement is structured without a voting trust and includes a $2.5 billion reverse termination fee.

Jim Vena, Union Pacific CEO, will lead the combined company as Chief Executive Officer and has committed his intent to remain at Union Pacific for at least the next 5 years. The experienced Union Pacific and Norfolk Southern management teams will continue to independently run each company until the transaction's closing

At closing, three Norfolk Southern Directors, including Mark George and Richard Anderson, are expected to join the Union Pacific Board of Directors after completing the corporate governance process.

The combined company will be headquartered in Omaha, Nebraska. Atlanta, Georgia will remain a core location for the combined organization over the long-term.