Prime Highlights
- Union Pacific and Norfolk Southern offered to divest stakes in smaller jointly owned railroads to advance their $85 billion merger.
- The companies expect the deal to save shippers $3.5 billion annually and remove 2.1 million trucks from roads.
Key Facts
- Union Pacific and Norfolk Southern are proposing a merger that would create the first coast-to-coast freight rail operator in the U.S.
- The merger faces opposition from rival carriers, freight shippers and several state attorneys general.
Background
Union Pacific and Norfolk Southern told a U.S. government agency this week that they were willing to divest ownership stakes in some smaller railroads as part of their proposed $85 billion merger. The deal would create the first coast-to-coast freight rail operator in the United States.
Following the merger, the two businesses said that they would not have influence over the Kansas City Terminal Railway, TTX Company, or Terminal Railroad Association of St. Louis (TRRA). These smaller railroads are jointly owned with other major carriers and run by independent management teams. Union Pacific and Norfolk Southern said they would divest their ownership interests in these lines if directed by the Surface Transportation Board. They argued that rival carriers were using the smaller railroads, particularly TRRA, to try to delay or block the merger.
The companies are expected to file additional answers to questions from the board later this month and have said they expect the transaction to close in the first half of next year. They stated that the merger would save shippers an estimated $3.5 billion annually, improve service reliability, shift freight from trucks to rail and protect union jobs. The railroads forecast that the combined network would remove around 2.1 million trucks from roads, helping reduce consumer prices.
Several groups, including freight shippers concerned about higher rates and attorneys general in some states, have raised objections to the merger. Rival carriers BNSF Railway and Canadian Pacific Kansas City continue to lobby against the deal. Earlier, the U.S. president, who has backed the merger, removed a board member seen as a likely opponent of the consolidation and named a new chairman.
