Norfolk Southern Corporation ( NYSE: NSC ) shares rose 3.4% after the company confirmed it is in "advanced discussions" with Union Pacific Corporation (NYSE: UNP ) about a potential business combination. Union Pacific shares fell 1% on the news, while peer CSX Corporation (NASDAQ: CSX ) rose 3.3%.
The companies' disclosures confirm media reports last week, including from The Wall Street Journal, of merger talks between the two major U.S. railroad operators.
In a brief joint statement, the two companies said they were in discussions about a possible merger but warned that there could be "no assurance as to whether a transaction would be reached or as to the terms of any such transaction."
Norfolk Southern and Union Pacific both said they did not intend to provide additional comment or updates on the matter unless disclosure is required or appropriate.
The potential merger of the two railroad giants could face significant regulatory scrutiny as it would combine two of the largest freight rail networks in the U.S. Norfolk Southern operates primarily in the Eastern U.S., while Union Pacific's network covers Western states.
The railroad industry has faced growing pressure to consolidate in recent years as companies seek operational efficiencies and expand network coverage. Any merger would need approval from the U.S. Surface Transportation Board, which regulates freight railroads.