A freight engine and shipping containers are viewed in a Union Pacific Intermodal Terminal rail yard on November 21, 2022 in Los Angeles, California.<\/p>\n
Mario Tama | Getty Images News | Getty Images<\/p>\n
Union Pacific<\/a> said on Thursday it was in advanced discussions with rival Norfolk Southern<\/a> for a possible mega merger that would create a transcontinental railroad behemoth.<\/p>\n Norfolk shares were up 3.5%, while Union Pacific fell 2.3% in premarket trading.<\/p>\n A deal, if it goes through, will combine Union Pacific’s dominant position in the Western two-thirds of the U.S. with Norfolk’s 19,500-mile route predominantly spanning 22 eastern states.<\/p>\n Norfolk has a market value of about $63.2 billion, while Union Pacific was valued at around $138 billion, according to LSEG data.<\/p>\n There can be no assurances as to whether an agreement for a transaction will be reached or as to its terms, Union Pacific said.<\/p>\n The North American railroad industry has struggled with volatile freight volumes, rising labor and fuel costs, and growing pressure from shippers over service reliability.<\/p>\n If the two companies agree to a deal, it would be largest-ever buyout in the sector.<\/p>\n It would also shape up as a key test of the Trump administration’s appetite for big-ticket mergers and faces a plethora of regulatory hurdles.<\/p>\n The first challenge would be securing approval from the Surface Transportation Board (STB), the federal agency that oversees railroads, currently led by Patrick Fuchs, a Trump appointee named to the post in January.<\/p>\n It would also require the support of worker unions and might invite scrutiny from several other federal bodies.<\/p>\n Major railroad unions have long pushed back against consolidation, warning that such deals threaten jobs and risk throwing rail service into disarray.<\/p>\n