Market Matters Blog           11/17 09:44

   Union Pacific, Norfolk Southern Shareholders Vote Yes to Proposed Merger

   Union Pacific Corporation and Norfolk Southern Corporation have taken a 
major step toward their proposed merger, with the shareholders voting yes, but 
opposition from the outside is strong.

Mary Kennedy
DTN Basis Analyst

   On Nov. 14, 99.5% of votes cast by Union Pacific (UP) shareholders and 
nearly 99% of votes cast by Norfolk Southern (NS) shareholders were in favor of 
issuing new shares to approve the two railroads' previously announced 
transaction to merge.

   "We appreciate our shareholders' support in reaching this important 
milestone on our path to building America's first coast-to-coast railroad," 
said Union Pacific CEO Jim Vena in a news release. "Our shareholders see the 
value and understand this merger will unlock new opportunities to enhance 
service, growth and innovation.

   "We look forward to filing our application with the Surface Transportation 
Board (STB) and detailing how the transaction will provide seamless, 
single-line service across the country to improve transit times, safely 
increase reliability and strengthen the competitiveness of U.S rail."

   Read Union Pacific's news release here: 
https://www.up.com/press-releases/financial/shareholders-approve-ns-merger-25111
4.

   "The approval of our shareholders marks a key milestone in our journey to 
create America's first coast-to-coast transcontinental railroad, combining 
complementary networks and capabilities to unlock a multiplier effect for 
benefits to all stakeholders," said Mark George, president and CEO of Norfolk 
Southern in a news release. "The merger will preserve union jobs and improve 
safety while delivering faster, more reliable transit times. Together with UP, 
we will make rail more competitive with highways, offering customers new, more 
attractive shipping alternatives, unleashing the industrial strength of 
American manufacturing and creating new sources of economic growth across the 
country."

   Read Norfolk Southern's news release here: 
https://www.norfolksouthern.com/en/newsroom/news-releases/norfolk-southern-share
holders-approve-transaction-with-union-pac.

   WHAT HAPPENS NOW AMID CONTROVERSY AND OPPOSITION

   Under the Surface Transportation Board's (STB) major merger regulations, the 
notice of intent by the UP and NS on July 28, also referred to as a prefiling 
notification, initiated a timeline for UP and NS to submit a merger application 
in three to six months, stated the board. In the filing to STB, UP and NS 
stated that they intended to file their application on or before Jan. 29, 2026. 
Here is a link to the major railroad mergers resources page on the STB website: 
(Click on this "49 CFR Part 1180" to learn what the procedure is and what the 
rules are.) https://www.stb.gov/resources/major-railroad-mergers/.

   Trains.com reported on Oct. 30 that Union Pacific and Norfolk Southern have 
asked federal regulators for a faster review of their proposed transcontinental 
merger. "UP CEO Jim Vena has said the merger is so pro-competitive that there's 
no reason for the STB to spend a year gathering information," Trains.com 
reported.

   In September, President Donald Trump met with UP CEO Vena and has publicly 
expressed his approval for the UP-NS merger. It's important to note that the 
Surface Transportation Board Reauthorization Act of 2015 (P.L. 114-110) 
established the STB as a wholly independent federal agency. Prior to the act, 
the STB was administratively aligned with the U.S. Department of 
Transportation, although its decision-making has been independent since its 
establishment in 1996.

   However, on Aug. 27, Trump fired board member Robert Primus who had served 
on the board since 2001. According to NBC on Aug. 28, White House spokesperson 
Kush Desai said in a statement: "Robert Primus did not align with the 
President's America First agenda and was terminated from his position by the 
White House. The Administration intends to nominate new, more qualified members 
to the Surface Transportation Board in short order." (Primus was the only vote 
against the 2023 merger between Canadian Pacific and Kansas City Southern.)

   U.S. Sen. Tammy Baldwin, D-Wis., said on her website on Aug. 28 about the 
firing, "This is as bad as it looks: Two railroad behemoths are trying to merge 
-- which would squash competition and jack up costs for Wisconsinites -- and 
Donald Trump is trying to stack the deck so the federal government rubberstamps 
the merger as a huge favor for Wall Street and wealthy railroad owners.

   "Robert's job, which was unanimously confirmed by the Senate, is to be a 
referee and provide independent oversight of the railroad industry. Donald 
Trump doesn't like the calls he is making, and Trump thinks he can fire him. 
It's wrong, and Wisconsin farmers, manufacturers, and families are going to pay 
the price," added Baldwin.

   Read the news release here: 
https://www.baldwin.senate.gov/news/press-releases/baldwin-calls-out-trump-firin
g-independent-railroad-regulator-as-favor-to-railroad-owners-and-wall-street.

   There are many organizations and elected officials vehemently against this 
merger. A recent one added to the mix was from BNSF to its customers on the 
BNSF website. "At our recent Industrial Supply Chain Summit, we surveyed 
customers, shortlines and transloaders. The results were compelling," said the 
BNSF:

   -- 97% did not believe further rail consolidation was necessary before this 
merger was announced.

   -- 95% are concerned about UP and NS integrating their networks successfully.

   -- 91% lack confidence in government safeguards against negative supply 
chain impacts.

   -- 87% disagree with UP-NS's projected volume growth claims.

   -- 68% are apprehensive about expressing public opposition.

   BNSF added, "We encourage you to participate in the STB review process and 
share your perspective. Let regulators know that preserving competition and 
customer choice is essential for a healthy supply chain and economy." 
https://www.bnsf.com/news-media/customer-notifications/notification.page?notId=i
mportant-update-on-up-ns-merger-and-what-it-means-for-you

   Here is a link to the many filings that have been submitted to the STB 
opposed to or in favor of the merger: 
https://www.stb.gov/proceedings-actions/filings/.

   Mary Kennedy can be reached at mary.kennedy@dtn.com

   Follow her on social platform X @MaryCKenn




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