Union Pacific CEO Jim Vena met with US President Donald Trump on 12/9 to discuss the proposed $85 billion acquisition of Norfolk Southern, seeking regulatory approval for what would be the largest US rail merger in decades.
Union Pacific dominates freight rail operations in the western US, while Norfolk Southern leads in the east. These two, along with BNSF Railway and CSX, comprise the "big four" US freight railroads.
News of the proposed merger between two of the four largest US freight companies surprised the market in July. Such a proposal would have been unthinkable under the previous administration of President Joe Biden, who pursued a strict anti-monopoly policy.
The deal faces opposition from competitors and concerns from shippers about reduced competition. However, Trump's support could expedite the review process.
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A Union Pacific freight train in Los Angeles. Photo: Reuters |
A Union Pacific freight train in Los Angeles. Photo: Reuters
"President Trump and Mr. Vena discussed how to build a transcontinental railroad that will benefit competition, consumers and the workforce upon approval of the merger," Union Pacific said in a statement.
Earlier, at a Morgan Stanley conference this week, Vena revealed he had met with "very senior people in the administration". "They understand the issue, they get the value of what we're proposing, and they think it's a win-win," Vena said.
Sources told Reuters that Union Pacific consulted with the administration before proposing the merger and received encouraging feedback. If approved, the deal could reshape the US freight industry, creating the first transcontinental railroad. This would simplify operations and eliminate delays at key hubs like Chicago.
When Union Pacific and Norfolk Southern announced the merger, industry experts predicted the other two major players would quickly merge to compete. However, Warren Buffett, chairman of Berkshire Hathaway, BNSF Railway's parent company, signaled his opposition last month, stating he wasn't interested in acquiring another railroad. BNSF recently expanded a trade agreement with CSX rather than pursue a merger.
Meanwhile, CSX faces pressure from investors to change its strategy, including potential mergers and acquisitions. Both BNSF Railway and CSX are closely watching how officials react to the Union Pacific-Norfolk Southern deal before making any decisions. Positive signs from the White House could force Buffett to reconsider his strategy.
Ha Thu (Reuters)
