Will The $85 Billion Union Pacific-Norfolk Southern Merger Be The First Transcontinental Railroad?

Forbes

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Transcript

00:00Rival rail companies Union Pacific Railroad and Norfolk Southern are merging in an $85

00:06billion deal, becoming the first business to have control of coast-to-coast rail lines

00:11in the U.S. The two rail companies announced on Tuesday that they agreed to combine in

00:17a stock and cash merger. Part of the deal includes the construction of a transcontinental

00:22railroad across 43 states and linking about 100 ports.

00:27According to a statement, the combined company will be worth over $250 billion.

00:34Union Pacific's railroads cover the West Coast and parts of the South and Midwest, while

00:39Norfolk's rails are across the East. Union Pacific and Norfolk Southern are aiming to

00:44complete the deal after approvals by 2027. Following the announcement of the merger,

00:50however, there was a dip in both companies' stock prices. Barron's attributed this dip

00:55to uncertainty about when the deal would be completed and the time it could take for

00:59approvals, which could be a concern for investors.

01:02The Union Pacific and Norfolk Southern merger comes at a time when the rail industry is facing

01:08multiple challenges—labor shortages, rising cost of fuel, and loss of business to trucks.

01:13The combined company, however, now faces a new hurdle as well. According to CNBC, the merger is expected

01:21to be challenged by the Smart Transportation Division, which is the rail labor organization

01:26in the country. The organization said in a statement that it is skeptical about the merger, citing strain

01:32on rail service operations and worker safety as some of their concerns. The group also expressed their

01:38concern about progressive labor and operational policies, which they said Norfolk Southern has

01:43moved toward recently, comparing it to Union Pacific's, quote, troubling safety record.

01:48For more on this story, check out the article at the link in the description.

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