Union Pacifics $85B Merger Proposal Navigates Regulatory Hurdles as Shares Rank 159th in Liquidity

Market Snapshot

Union Pacific (UNP) closed on December 23, 2025, with a 0.20% decline in its stock price, marking a modest pullback amid broader market volatility. The company’s trading volume for the day totaled $0.46 billion, ranking it 159th in terms of liquidity across the stock market. While the decline was relatively minor, the performance reflects cautious investor sentiment ahead of the anticipated regulatory review of its proposed $85 billion merger with Norfolk Southern (NSC).

Key Drivers

The proposed merger between Union Pacific and Norfolk Southern has emerged as the central factor influencing market dynamics. On December 19, the two railroads submitted a 7,000-page application to the U.S. Surface Transportation Board (STB), seeking approval to create the first coast-to-coast freight railroad network. The combined entity would control over 50,000 route miles across 43 states and 100 ports, with projected annual synergies of $2.75 billion. Proponents, including Nebraska Governor Jim Pillen, have highlighted the potential for job creation, with Union Pacific forecasting over 500 new managerial roles at its Omaha headquarters. The state has also endorsed the deal, emphasizing its historical ties to Union Pacific and the economic benefits of enhanced rail connectivity.

However, the merger faces significant regulatory and competitive challenges. Canadian National Railway (CNI) has emerged as a vocal critic, arguing that the transaction would reduce competition in the U.S. freight rail market. CNI’s statement underscored concerns that the merger would concentrate over 40% of the market under a single entity, potentially driving up costs for customers and stifling innovation. The company has pledged to “actively participate” in the STB review process, urging stakeholders to engage to ensure a balanced evaluation. Shares of CNI have fallen approximately 3.6% since the merger was announced, reflecting investor skepticism about its long-term viability.

The regulatory landscape remains uncertain, with the STB’s decision expected to weigh heavily on the merger’s prospects. While Union Pacific and Norfolk Southern emphasize efficiency gains and reduced transit times—such as eliminating interchange delays between railroads—CNI and other critics have raised red flags about market concentration. The STB’s statutory timeline for review could extend into early 2027, adding to the uncertainty for investors. Additionally, the potential for legal challenges or public opposition could further delay approval, complicating the projected timeline for the transaction.

From a market perspective, the stock’s modest decline on December 23 may reflect a mix of factors. Investors appear to be balancing optimism about the merger’s operational benefits—such as expanded route networks and cost savings—with concerns over regulatory hurdles and competitive risks. The lack of a clear resolution in the STB process has created a wait-and-see attitude among traders, contributing to limited volatility in UNP’s share price.

Ultimately, the merger’s success will depend on the STB’s assessment of its economic and competitive impacts. If approved, the combined entity could reshape U.S. freight rail logistics, offering faster single-line service and strengthening supply chain resilience. However, the opposition from CNI and other stakeholders highlights the broader debate over market consolidation in the transportation sector. For now, Union Pacific’s stock remains in a holding pattern, with investors closely monitoring developments in the regulatory process.