Union Pacific and Norfolk Southern confirmed that they are in “advanced” merger talks that would create a single U.S railroad with service stretching from the East to the West Coast.
The Associated Press reported last week that the companies were discussing a tie-up but neither company acknowledged that until Thursday morning.
The potential merger would combine the largest and smallest of the country’s six major freight railroads.
Independent railroad analyst Tony Hatch said that the disclosure by the railroads suggests that negotiations are further along than previously thought.
“What people will interpret out of that is that they have, one way or another, figured out what the benefits are,” Hatch said, adding that those benefits, such as efficiency, would be passed on to customers. That will be key for getting regulatory approval under the Surface Transportation Board’s enhanced competition clause.