Union Pacific has announced its intentions to buy its smaller rival, Norfolk Southern, which would create the first coast-to-coast freight rail operator in the United States and reshape the movement of goods from grains to autos across the US.

The Omaha, Nebraska-based railroad giant announced the proposed $85bn deal on Tuesday.

If the merger is approved, the transaction would be the largest-ever buyout in the railroad sector.

Union Pacific has a stronghold in the western two-thirds of the US, with Norfolk’s 31,382 km (19,500-mile) network that primarily spans 22 eastern states.

The two railroads are expected to have a combined enterprise value of $250bn and would unlock about $2.75bn in annualised synergies, the companies said.

The $320 per share price implies a premium of 18.6 perce

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