Union Pacific to Acquire Norfolk Southern in Major Deal

Norfolk Southern, VA – On July 28, 2025, Union Pacific announced plans to acquire Norfolk Southern for $85 billion, marking a significant shift in the rail industry. The deal, valued at $320 per share, reflects a 25% premium over Norfolk Southern’s average share price leading up to the announcement.

Norfolk Southern has seen a mixed performance recently, reporting a 2.2% increase in revenue year-over-year to $3.11 billion in the second quarter of 2025. However, this fell short of Wall Street’s expectations. The company’s GAAP profit of $3.41 per share did surpass estimates by 3.3%, indicating it remains profitable even amid struggles in the Rail Transportation sector.

Over the past five years, Norfolk Southern has experienced sluggish growth, with an annualized revenue increase of just 3.5%. Analysts are projecting a modest revenue growth of 3.2% over the next year, which remains under the average for the industry.

Despite these challenges, the company has maintained a strong operating margin of 37.8%, showing stability in its cost structure. Furthermore, Norfolk Southern has achieved a compounded annual growth rate of 13% in earnings per share (EPS) during the last five years, a positive sign for shareholders.

The pending acquisition by Union Pacific is expected to create a transcontinental railroad network that would significantly enhance operational efficiencies across 50,000 miles of track connecting 43 states. This merger could reshape the U.S. rail industry while creating an enterprise valued over $250 billion.

In the immediate aftermath of the earnings report, Norfolk Southern’s stock dropped by 2.5%, further underlining the market’s cautious view on its future performance. As analysts assess the implications of the merger, investors are weighing whether this deal represents an attractive investment opportunity.