Union Pacific and Norfolk Southern confirmed on Thursday they have started advanced discussions surrounding a possible merger.
A merger would create a transcontinental railroad and could be the largest-ever buyout in the sector.
“There can be no assurances as to whether an agreement for a transaction will be reached or as to the terms of any such transaction,” the companies said in a news release.
Both companies said they would not be making further comment on the discussions unless disclosure is required or appropriate.
Union Pacific is valued at around $138 billion, according to LSEG data, and covers 23 states across the American west. Its rival Norfolk Southern has an estimated market value of $63.2 billion and covers 22 eastern states.
If the companies come to an agreement, it would require approval from the Surface Transportation Board (STB) and its new head Patrick Fuchs, who was appointed to the post in January by President Donald Trump.
The merger would also require support from other federal agencies and from unions. Many major railroad unions have pushed back against the idea of a transcontinental railroad, saying such a move would threaten jobs. Other critics have said such a move would threaten competition and force other major railroads to follow suit, reducing the number of major rail companies from six to four.
The last major railroad consolidation effort was the $31 billion merger in 2023 between Canadian Pacific and Kansas City Southern which was the first and only rail network linking Canada, the United States and Mexico.