A PYMNTS Company

Two Major Railroads Reject Consolidation as Union Pacific Pursues $85 Billion Deal

By  |  August 27, 2025
Firms Using Third Parties to Fight Fraud See Profit Boost

Two of North America’s most prominent freight rail companies have withdrawn from the wave of merger speculation that has dominated the industry in recent weeks, a development that could reshape the outlook for Union Pacific’s proposed $85 billion deal with Norfolk Southern.

    Get the Full Story

    Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.

    yesSubscribe to our daily newsletter, PYMNTS Today.

    By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions.

    According to Reuters, Warren Buffett’s BNSF Railway and Canadian Pacific Kansas City each stated this week that they would not pursue near-term mergers, easing fears that Union Pacific’s bid would trigger a broader consolidation spree. Their announcements reduce the likelihood of a domino effect in which other major carriers would seek to join forces in order to compete with a potential coast-to-coast giant.

    The Union Pacific-Norfolk proposal, unveiled last month, would create the first U.S. railroad stretching from the Atlantic to the Pacific, transforming freight movement for goods such as automobiles and agricultural commodities. Per Reuters, the deal immediately sparked speculation that CSX, a leading eastern carrier, might align with BNSF or Canadian Pacific to keep pace. That scenario now appears less probable after both railroads dismissed the idea of large-scale mergers.

    The U.S. freight rail industry has already contracted to just six major carriers from dozens in past decades. Four dominate the market—two in the west and two in the east—leaving shippers with limited options. The Union Pacific-Norfolk plan would tilt this balance further, which has heightened scrutiny from regulators. The Surface Transportation Board is expected to take 17 to 22 months to review the proposal, Reuters reported.

    Canadian Pacific emphasized in a statement that it does not believe additional consolidation is necessary and warned that a transcontinental deal could “trigger permanent restructuring” of the industry. CEO Keith Creel said such a merger would pose “unique and unprecedented risks to customers, rail employees and the broader supply chain.” Instead of pursuing acquisitions, the company has chosen to expand cooperation with other carriers, such as its new collaboration with CSX to enhance service between the U.S. Southeast and Mexico.

    BNSF’s decision followed a similar rationale. Backed by Buffett’s Berkshire Hathaway, the company privately met with CSX leadership earlier this month but made clear it would not pursue a merger, according to Reuters. Instead, BNSF recently announced new joint services with CSX, underscoring a preference for partnerships over full consolidation.

    The reduced appetite for further mergers leaves Union Pacific facing heightened regulatory risks. If its deal with Norfolk Southern proceeds as the only megamerger under review, oversight agencies could be more concerned about one coast-to-coast operator limiting options for smaller rivals. Norfolk has confirmed that Union Pacific would pay a $2.5 billion cash termination fee if the agreement falls apart under certain conditions.

    CSX, meanwhile, has indicated it will continue to explore expanded service offerings to strengthen transcontinental routes, even without a merger partner. The company said its board and management remain committed to enhancing shareholder value through new service agreements like those announced with BNSF.

    Source: Reuters