Union Pacific, Norfolk Southern to Create America’s First Transcontinental Railroad

Union Pacific Corp. and Norfolk Southern Corp. today announced an agreement to create America’s first transcontinental railroad.

The Union Pacific Transcontinental Railroad will span more than 50,000 route miles across 43 states, connecting the East Coast and the West Coast, and linking approximately 100 ports.

Under the terms of the agreement, Union Pacific will acquire Norfolk Southern in a stock and cash transaction, implying a value for Norfolk Southern of $320 per share based on Union Pacific’s unaffected closing stock price on July 16, and representing a 25% premium to Norfolk Southern’s 30-trading-day volume-weighted average price on July 16. The value per share implies an enterprise value of $85 billion for Norfolk Southern, resulting in a combined enterprise value of over $250 billion.

Both railroads envision that every union employee who wants a job in the combined company will have one.

“This combination is transformational, enhancing the best freight transportation system in the world – it’s a win for the American economy, it’s a win for our customers, and it’s a win for our people,” Union Pacific Chief Executive Officer Jim Vena said in a release. “It builds on President Abraham Lincoln’s vision of a transcontinental railroad from nearly 165 years ago and advances our Safety, Service and Operational Excellence Strategy. I am confident this historic transaction will enhance competition to benefit customers, communities, and employees while delivering shareholder value.”