May 28 (Reuters) – The U.S. Surface Transportation Board said on Thursday it has paused the review of railroad operators Union Pacific and Norfolk Southern’s $85 billion merger application, while it seeks more information from the companies.
Shares of Union Pacific fell 4.2%, and those of Norfolk dropped 5.4%.
The companies’ merger application has been accepted, but proceedings, including the environmental review, have been put on hold, the STB said. The board has exclusive jurisdiction over railroad mergers.
“Several aspects of the revised application… are unclear or underdeveloped and require supplementation at this stage,” the STB said.
The companies filed an amended application in April for their merger to create a coast-to-coast U.S. freight rail operator after an initial proposal was sent back for revisions by the STB in January.
The board has now asked the railroad operators to submit additional information related to enhanced competition, market share projections and downstream merger impacts, among others, by July 27.
A coalition of business groups, rival railroads and organized labor unions has opposed the deal, arguing that it would stifle competition and raise costs for manufacturers, farmers and consumers.
“Union Pacific and Norfolk Southern will continue working closely with the STB to provide the requested information and further strengthen the record,” the companies said in a joint statement.
Once the companies provide the information, the STB will review the evidence over one year to determine whether the transaction serves the public interest, then issue a decision within three months.
The companies expect the transaction to be completed in mid-2027, compared to their initial expectation of April 2027.
A delay is not likely to impact the likelihood of the deal going through, RBC analyst Walter Spracklin wrote, adding that he sees Thursday’s update as “neutral to sentiment.”
(Reporting by Aishwarya Jain and Apratim Sarkar in Bengaluru; Additional reporting by Rashika Singh; Editing by Diti Pujara and Shinjini Ganguli)
Comments