Railroad mega-merger sets up more consolidation
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Lindsey Bailey/Axios
Union Pacific and Norfolk Southern both have set Nov. 14 for shareholder votes on their $85 billion megamerger, which would create the first U.S. railroad that runs coast-to-coast.
Why it matters: This is a precursor to broader industry consolidation.
State of play: Once the deal is approved by shareholders, the companies can complete their application to the Surface Transportation Board.
- That's where a real lobbying fight could take place, but the White House has signaled that it wants this deal to go through. And, in case you haven't been paying attention, this White House gets what it wants from "independent" federal agencies.
Zoom in: Assuming this deal goes through, expect a lot of focus on rival railroad CSX — which recently replaced its CEO with more of a dealmaker.
- The most logical buyer is Berkshire Hathaway's BNSF.
- So far it's seemed disinterested, but many believe that Warren Buffett and successor Greg Abel are just biding their time until the STB blesses Union Pacific-Norfolk Southern. Particularly if the regulators insist on any divestitures that could better inform a CSX takeover offer.
- Axios Pro's Colin Campbell adds that Canadian railroads may weigh bids for CSX, but notes that such efforts might crash into Trump's "America First" agenda.
Look ahead: There also could be a series of downstream deals in the supply chain space, such as in trucking and logistics.
The bottom line: Union Pacific + Norfolk Southern is going to happen. The real intrigue is what happens next.
