Latest news with #UnionPacific
Business Insider
6 hours ago
- Business
- Business Insider
M&A News: Norfolk Southern Stock (NSC) Derails after $85B Union Pacific Takeover
Shares in train company Norfolk Southern (NSC) slid off track today as it agreed a deal with rival Union Pacific (UNP) to create an Abraham Lincoln-like $250 billion rail giant. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Coast to Coast Union Pacific, whose share price also slipped 0.5%, said it would buy smaller rival Norfolk Southern in an $85 billion deal. If approved, the deal would be the largest-ever buyout in the sector and combine Union Pacific's stronghold in the western two-thirds of the U.S. with Norfolk's 19,500-mile network that primarily spans 22 eastern states. Norfolk Southern was down 2.7% in pre-market trading, despite the all-stock deal promising to create the largest railroad operator in the country with over 50,000 miles of track, across 43 states. Indeed, it would be the first operator to move goods from the Pacific Coast on the West to the Atlantic on the East using its own tracks. Union Pacific said this would finally meet former U.S. President Abraham Lincoln's vision of a transcontinental railroad first set out 165 years ago. The deal values Norfolk Southern at $320 per share, giving it a value of $85 billion. Union Pacific is valued at around $165 billion. Despite being smaller, Norfolk has outperformed peers this year. Regulatory Barriers The railroad sector has been hit in recent times by high labor costs, fuel prices and weaker freight volumes. Although an uptick in U.S. manufacturing as a result of President Trump's tariff policies and calls for more domestic investment could spark a revival. Indeed, the macro picture is a key risk in the business model of railroad operators. 'Railroads have been an integral part of building America since the Industrial Revolution, and this is the next step in advancing the industry,' said Jim Vena, Union Pacific's chief executive. Mark George, chief executive of Norfolk Southern, said the deal would help ignite rail's ability to 'deliver for the whole economy.' Given the size of the deal, it is likely that there may be some regulatory barriers dead ahead. The last major transaction in the sector – Canadian Pacific's (CP) $31 billion takeover of Kansas City Southern – took 2 years to gain approval. If it did get the green light the deal would be the biggest since Microsoft's (MSFT) $75.4 billion takeover of Activision Blizzard back in 2023. Is NSC a Good Stock to Buy Now? NSC stock's consensus price target is $288.67, implying a 0.79% upside.
Hindustan Times
13 hours ago
- Business
- Hindustan Times
Union Pacific to acquire Norfolk Southern in $85 billion deal to create 1st coast-to-coast US freight railroad
Union Pacific has confirmed that it will acquire Norfolk Southern in a massive $85 billion deal: the largest in the history of the United States railroad industry. The combined company, to be called Union Pacific Transcontinental Railroad, would create the nation's first coast-to-coast freight network reshaping how goods move across the US, The New York Times reported. Union Pacific has reached an agreement to purchase Norfolk Southern in a $85 billion deal.(Getty Images via AFP) Union Pacific, dominant in the West, and Norfolk Southern, with a vast 19,500-mile network across the East will merge to form a 50,000-mile network which spans across 43 states. The companies project $2.75 billion in annualized synergies with a combined enterprise value of $250 billion. The purchase price, $320 per share, represents an 18.6 per cent premium over Norfolk Southern's stock as of July 17, when merger talks first emerged, Reuters reported. Also Read: Data of nearly 14 Lakh Americans exposed in massive insurance company hack: Report Regulatory scrutiny and labor pushback While the deal offers efficiency gains and logistical streamlining, it is expected to face intense scrutiny from the Surface Transportation Board (STB), especially as major labor unions voice strong opposition. Jeremy Ferguson, president of the SMART-TD union, North America's largest rail union, claimed that the merger is not good for labor and the rail shipper/customer, or the public. He said that it could lead to job losses, rate hikes, and service disruptions, referencing issues following the 1996 Union Pacific-Southern Pacific merger, according to Al Jazeera. Even under expedited review, STB approval could take 19 to 22 months. The companies aim to file with the board within six months and expect to close the merger by early 2027, NYT report states. Industry ripple effects and competitive pressure The merger has sparked competitive pressure on other rail giants. According to Al Jazeera, BNSF, owned by Berkshire Hathaway, and CSX are exploring merger options in response. If both megamergers proceed, Class I railroads in North America will shrink from six to four, consolidating nearly 90 per cent of the US rail freight capacity. The last major deal in the sector, Canadian Pacific and Kansas City Southern's $31 billion merger, faced similar concerns before being approved in 2023. Also Read: 'US was designed to take your money': American man explains why he won't return home Operational and historical significance Union Pacific's CEO Jim Vena said railroads were an integral part of America's development since the Industrial Revolution and the merger was the next step in advancing the industry. The combined railroad would employ over 50,000 workers, 80 per cent of whom are unionized. Analysts believe it could resolve longstanding issues like rail freight bottlenecks in Chicago by enabling seamless transcontinental routes via St Louis or Memphis. Meanwhile, some experts have argued that competition from trucking and intermodal logistics could limit the merged firm's pricing power. FAQs What railroads merged with Union Pacific in the past? Union Pacific previously merged with Southern Pacific in 1996, a deal that initially caused service disruptions and congestion. Is Union Pacific buying Norfolk Southern? Yes, Union Pacific announced on July 29, 2025, its $85 billion acquisition of Norfolk Southern. What happened to the Union Pacific Railroad company? It remains a major US freight rail operator. This new deal aims to make it the first to operate a unified coast-to-coast network. Will the merger affect shippers and consumers? Shippers worry about higher rates and less competition. Regulators will assess these impacts before approving the merger.
Yahoo
15 hours ago
- Business
- Yahoo
CEOs say Union Pacific-Norfolk Southern merger will reverse rail freight decline
Union Pacific and Norfolk Southern executives touted their proposed merger as a way to return to volume growth after losing market share to trucks since rail traffic peaked in 2006. 'We can only go so far independently. And let's face it, this industry has faced contraction over the last couple decades in terms of volume growth,' NS Chief Executive Mark George told investors and analysts on a conference call this morning. 'We've been losing share to truck — and this is one way to reverse that trend.' The historic combination — which would create the first transcontinental railroad in the U.S. — would unleash growth by eliminating problematic interchanges, speeding and simplifying service, and enabling the railroad to tap the so-called watershed markets along the Mississippi River. UP and NS envision reeling in $1.75 billion in growth-related revenue by the third year of their merger. UP (NYSE: UNP) and NS (NYSE: NSC) currently exchange about 1 million shipments per year and are each other's largest interchange partners. Single-line service will reduce strain on gateways such as Chicago and Memphis, end inefficient crosstown rubber-tire intermodal interchanges, and allow customers to receive rate quotes and bills from one railroad rather than two. 'In the future, those million carloads will immediately see a 24- to 48-hour improvement in their transit time,' Vena said. 'That combination of faster service and greater market reach is powerful, making our transcontinental railroad an attractive choice for both current and future customers.' The transcontinental system's traffic opportunities include providing seamless service from coast to coast — and most places in between — for intermodal, finished vehicles, food and beverage, chemicals, and steel shipments. For intermodal and carload, the merger would open up service in the nation's midsection that's currently not well-served by rail due to the short hauls for the eastern or western carrier, or both. 'With our interchange with UP today, 95% of our interchange is over 2,000 miles, meaning only 5% is under 2,000 miles. We see an enormous opportunity to grow in lanes where we would be in that 1,000-mile or 1,500-mile range,' George said of intermodal. 'So that's just one example, and that kind of touches upon the entire watershed story.' Railroads are not competitive on short-haul moves in the watershed, an underserved area that stretches from Wisconsin and Minnesota to eastern Texas, Louisiana, and Mississippi. 'When you're going from west of it to east, or east to west, rail is never even contemplated because it's just too much hassle, too much extended time, and frankly, too much cost,' George said. 'So these are the areas where we see tremendous growth.' Single-line service through the watershed on a combined UP-NS system would enable the railroad to compete for traffic moving between Houston and Charlotte, N.C., and Dallas and Columbus, Ohio, for example. 'There's an awful lot of opportunity here where there's virtually no rail moves. It's all truck moves, and those are big markets,' George said, adding that revenue growth from truck conversion likely would exceed the railroads' $1.75 billion estimate. A merger also would allow the railroads to eliminate intermediate handlings for carloads. 'We will remove touch points, and every time there's a touch point, you add 24 to 36 hours, even at the best, while you're switching the rail car. That's gone,' Vena said. 'On top of that, at the interchange points, where we used to stop and hand off, those are removed. So every customer that today, when we are finally approved … we're going to cut a day or two off of every transit time.' And that, he says, will reduce costs for customers, who can reduce the size of their car fleets due to faster cycle times. It also will mean a more fluid railroad. For new through trains, Chicago will become just another crew change point on the map. But Vena says it's unlikely that there will be massive swings of volume away from Chicago, a chronic chokepoint where 25% of rail traffic originates, terminates, or passes through. 'We don't see a huge amount of business changing from Chicago to go to Memphis or go to New Orleans because the out of route miles just don't add up,' Vena said. The transcontinental UP also will be able to repatriate international intermodal traffic that Canadian ports, particularly at Vancouver and Prince Rupert, British Columbia, have lured away from U.S. ports over the past two decades, Vena said. Executives also expressed confidence that their deal could gain regulatory approval. The UP-NS combination will be the first judged under the Surface Transportation Board's 2001 merger review rules. The rules require a merger of Class I railroads to enhance competition — not merely preserve it — and to be in the public interest. Vena said that if the STB systematically reviews the deal while asking if a transcontinental railroad is better for customers and the country, they will approve it. 'We're very confident of that, or we wouldn't have taken the step,' he said. Only 20 customers are currently jointly served by UP and NS where their networks overlap in the Midwest. 'We intend to provide a competitive alternative,' Vena said, noting that specifics will be included in the merger application. The railroads also structured their deal without the use of a voting trust. Rail mergers have typically involved placing the railroad being acquired into a voting trust in order to maintain the railroad's independence and to allow its stockholders to cash out while the merger is under regulatory review. The STB in 2021 rejected Canadian National's (NYSE: CNI) request to put Kansas City Southern in a voting trust, saying it wasn't in the public interest. The decision scuttled the proposed CN-KCS merger and led to the Canadian Pacific (NYSE: CP)-KCS combination, which was judged under the less restrictive old merger review rules due to an exemption granted to KCS, by far the smallest of the Class I railroads. UP and NS are not taking that chance. 'We actually believe that a voting trust would complicate and potentially delay the transaction,' UP Chief Financial Officer Jennifer Hamann said. 'So we want to go to the STB with a fully developed merger application that allows us to really lay out the fundamentals of this merger and provide all the necessary details that supports our position that this will not only enhance competition, but is absolutely in the public interest.' Plus, without a voting trust UP won't have to fund the deal until it gains STB approval, which is estimated for 2027 based on the STB's statutory guidelines. Railroad mergers in the modern era have had one thing in common: Service problems that occur while meshing operations and information technology systems. UP's operational decisions in Houston after the 1996 acquisition of Southern Pacific created a massive traffic jam in 1997 and 1998. On the heels of that, information technology problems led to immediate service problems on Norfolk Southern after the 1999 split of Conrail with CSX (NASDAQ: CSX), which later stumbled with its own service issues. 'A transaction of this size and scope won't be easy to execute. We understand that,' Vena said. The railroad will maintain adequate reserves of locomotives, train crews, and other resources in order to be able to better respond and recover to service issues, he said. 'We're very aware of what led to the merger moratorium back in the 2000, 2001 time frame, and it was just a bunch of bad integrations,' George said. 'And we are committed to make sure that doesn't happen in this case.' The two-year review process will allow sufficient time for planning, George said, particularly on information technology systems. CPKC's problematic computer cutover this past May in former KCS territory in the U.S. produced congestion, missed switches, and delays that CPKC has now mostly mopped up. Last year UP had a smooth cutover to its new cloud-based NetControl computer system, which processes everything from rail car inventory and scheduling to waybill processing and train, locomotive, and terminal management. 'It was a non-event,' Vena said. 'It was like nobody knew it actually happened.' Much of the $2 billion the railroads have earmarked for increased capital spending will go toward information technology investments. Assuming shareholders approve the deal, UP will acquire NS in a stock and cash transaction that values NS at $320 per share, a 25% premium. The combined company would have an enterprise value of more than $250 billion. The railroads said the merger would create $2.75 billion in annual synergies, split between $1.75 billion in revenue growth and $1 billion in cost and productivity savings. UP will finance $20 billion of the deal through a combination of cash on hand and new debt. Both railroads will stop their share buyback programs through 2028 but will maintain dividend payments. The railroads pledged to preserve union jobs, which are the vast majority of the combined system's 52,000-strong workforce. 'All of our union employees who have a job today will have jobs tomorrow in our merged company,' Vena said. 'And a company that is growing its business and spurring economic development creates even more jobs.' Nonetheless, the SMART-TD union that represents conductors said it would oppose the merger. Yesterday shipper associations told Trains that they would oppose further consolidation in the rail industry. How will the railroads handle objections from shippers and rail labor? 'We'll handle them one by one, but I think as people start to come to understand what we're putting forward, they're going to see the benefits,' George said. That especially applies to labor because the company would add jobs as it gains new traffic, he said. Subscribe to FreightWaves' Rail e-newsletter and get the latest insights on rail freight right in your line up against railroad mergers Union Pacific and Norfolk Southern reach $85 billion merger deal First look: Norfolk Southern earnings Bill aims to prioritize rail freight, untangle congestion The post CEOs say Union Pacific-Norfolk Southern merger will reverse rail freight decline appeared first on FreightWaves. Sign in to access your portfolio
Business Times
15 hours ago
- Business
- Business Times
US: Stocks retreat ahead of Fed decision, big tech earnings
[NEW YORK] Wall Street stocks retreated on Tuesday as markets digested major merger announcements and monitored US-China trade talks ahead of big tech earnings later in the week. Representatives from Beijing and Washington signaled further talks were likely following a round of negotiations in Stockholm. But a top US trade official stressed that President Donald Trump would make any 'final call.' Meanwhile investors digested several significant earnings reports, as well as merger announcements in the rail and energy sectors ahead of major economic news catalysts later in the week. 'After reaching all time highs, markets are going to take a wait and see attitude,' said Art Hogan of B. Riley Wealth Management. The Dow Jones Industrial Average finished down 0.5 per cent at 44,632.99. The broad-based S&P 500 shed 0.3 per cent to 6,370.86, while the tech-rich Nasdaq Composite Index declined 0.4 per cent to 21,098.29. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Both the S&P 500 and Nasdaq had finished at records on Monday. Steve Sosnick of Interactive Brokers described Tuesday's activity as a 'little bit of position squaring ahead of a potentially very volatile few days.' Besides earnings from Apple, Facebook parent Meta and other tech giants, markets will absorb a Federal Reserve interest rate decision. The central bank is expected to keep rates unchanged, but could hint that an interest rate cut will be more likely in September. Trump has lambasted Fed Chair Jerome Powell for not cutting interest rates. The market will also receive key economic reports on the labor market, inflation and US growth. Among companies reporting earnings on Tuesday, Boeing dropped 4.3 per cent, UnitedHealth Group sank 7.4 per cent and Whirlpool dived 13.4 per cent Union Pacific announced it will be acquiring Norfolk Southern for US$85 billion, creating a transcontinental railroad intended to boost freight rail efficiency. Union Pacific fell 2.3 per cent while Norfolk Southern fell 3.0 per cent. Analysts expect the deal to encounter regulatory scrutiny. Oil services company Baker Hughes said it would acquire Chart Industries for US$13.6 billion, adding assets in natural gas, data centres and decarbonisation. Baker Hughes dropped 1.7 per cent while Chart surged 15.8 per cent. CyberArk Software surged 13.5 per cent following a report it was in talks to be acquired by Palo Alto Networks in a merger of cybersecurity ventures. Palo Alto fell 5.2 per cent. AFP
Bloomberg
15 hours ago
- Business
- Bloomberg
Stock Movers: Novo Nordisk, Palo Alto, Union Pacific
On this edition of Stock Movers: - Novo Nordisk (NVO) shares close down 23%, erasing more than $73 billion in market value, after the maker of Wegovy and Ozempic cut its sales and profit forecasts, citing slumping sales of weight-loss drugs. The Danish drugmaker also named a company insider as its new CEO, which one investor said may disappoint those hoping for a radical shake-up under an external hire. It was the stock's steepest one-day drop on record and took the shares to the lowest level since March 2022. - Palo Alto Networks (PANW) shares fell after the Wall Street journal reported that the company is in talks to buy CyberArk Software Ltd. (CYBR) in a deal that could value the Israeli cybersecurity firm at more than $20 billion. Palo Alto Networks may finalize a deal as soon as this week, the Journal reported Tuesday, citing people familiar with the matter whom it didn't identify. CyberArk declined to comment. Palo Alto Networks didn't respond to a request for comment. - Union Pacific (UNP) shares are down today. The company agreed to acquire Norfolk Southern Corp. (NSC) in a $72 billion cash-and-stock transaction, forming the only US transcontinental railroad in what stands to be the industry's largest deal ever. The tie-up will marry Union Pacific's network across the western US with Norfolk's East Coast routes, reshaping a domestic rail market that's now comprised of just a half-dozen companies. Observers predict other major deals could follow, as competitive pressure rises on rivals including CSX Corp. and Berkshire Hathaway Inc.'s BNSF. 'We think the political environment is accommodating,' Union Pacific Chief Executive Officer Jim Vena said Tuesday in an interview. The companies have already spoken with regulators, members of the Trump administration and congressional lawmakers. 'We wouldn't have taken this path if we had not engaged and understood what they needed to see us deliver and whether we could.'
