New York/Washington — Union Pacific CEO Jim Vena met with US President Donald Trump in the Oval Office to discuss the railroad’s proposed $85bn buyout of Norfolk Southern Corporation, the company said on Friday, as it seeks regulatory approval for the biggest US rail merger in decades.
The July announcement of the merger between two of the four major US rail operators surprised the already highly concentrated market. Such a proposal would have been unthinkable under the Biden administration, which had an aggressive antitrust policy.
The White House did not immediately respond to a request for comment.
Trump’s support could accelerate the lengthy review process, in a deal that faces resistance from rivals and pushback from shippers concerned about reduced competition. The deal, if approved, could reshape the US freight rail industry by creating the first coast-to-coast single-line network, streamlining operations and eliminating interchange delays in hubs such as Chicago.
In the White House meeting, Trump and Vena discussed “how creating an American transcontinental railroad is a win for US competition, consumers and the unionised workers whose jobs will be protected when the merger is approved,” the company said in a statement. Vena said at a Morgan Stanley conference on Wednesday that he had meetings with “very senior people in the administration” the day before, without naming them.
“They get it. They understand the value of what we are proposing. And they think it is an absolute win-win for the country,” Vena said during the conference.
Union Pacific sought administration input before launching its bid and received signals of support to move forward, people briefed on the talks said.
Trump said on Friday on Fox News that he met with Vena because the CEO wanted to discuss the merger with him.
Berkshire Hathaway
Union Pacific dominates freight rail operations in the western US, while Norfolk Southern is a leading carrier in the East. Together, they form two of the four major US Class I railroads, alongside BNSF Railway and CSX Corporation. When Union Pacific and Norfolk announced the merger, the industry expected the two remaining regional rivals to respond by rushing to join forces to compete against a continental giant.
But billionaire Warren Buffett, whose Berkshire Hathaway owns BNSF Railway, sent a strong signal last month against further consolidation and said he was not interested in buying another railroad. BNSF recently expanded commercial agreements with CSX instead of pursuing a merger. CSX, meanwhile, faces pressure from activist investors to make strategic changes, including potential merger & acquisitions activity. Both companies are closely watching how regulators respond to the Union Pacific-Norfolk merger before making any moves.
Signs of the White House’s support could force Buffett to revisit his strategy.
Transcontinental system
BNSF, strong in the West, and CSX, dominant in the East, could remain the only major US carriers that are not part of a transcontinental system.
The White House said on Thursday it was nominating Surface Transportation Board member Michelle Schultz for a new term and Richard Kloster, who heads a private transportation consulting company, to an open seat at the agency.
The White House last month fired Surface Transportation board member Robert Primus, an appointee of former president Joe Biden.
The dismissal was the strongest signal possible of White House support for the deal, a person close to the transaction said.
Reuters
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