Union Pacific Corporation and Norfolk Southern Corporation announced an agreement to create “America’s first transcontinental railroad” from coast to coast. The companies 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,” a press release explains. The effort will “transform” the U.S. supply chain, the companies said, as well as “unleash the industrial strength of American manufacturing, and create new sources of economic growth and workforce opportunity that preserves union jobs.”
Under the agreement, Union Pacific will acquire Norfolk Southern in a “stock and cash transaction,” valuing Norfolk Southern at $320 per share and representing a 25% premium to Norfolk Southern’s 30-trading-day volume. “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 companies explained.
“Railroads have been an integral part of building America since the Industrial Revolution, and this transaction is the next step in advancing the industry,” Union Pacific Ceo Jim Vena. “Imagine seamlessly hauling steel from Pittsburgh, Pennsylvania to Colton, California and moving tomato paste from Huron, California to Fremont, Ohio. Lumber from the Pacific Northwest, plastics from the Gulf Coast, copper from Arizona and Utah, and soda ash from Wyoming. Right now, tens of thousands of railroaders are moving almost everything we use. You name it, and at some point, the railroad hauled it.”
Mark George, CEO of Norfolk Southern, similarly stated, “Norfolk Southern, like Union Pacific, is a railroad integral to the U.S. economy, with a storied 200-year legacy of serving customers across 22 states in the eastern half of the nation.”
“Our safety, network, and financial performance is among the best we’ve had as a company, as is our customer satisfaction. And it is from this position of strength that we embark on this transformational combination,” George added. “We are confident that the power of Norfolk Southern’s franchise, diversified solutions, high-quality customers and partners, as well as skilled employees, will contribute meaningfully to America’s first transcontinental railroad, and to igniting rail’s ability to deliver for the whole American economy today and into the future. Union Pacific is a true partner that shares our belief in rail’s ability to deliver for all stakeholders simultaneously, and we are excited for our future together.”
