Railroad operator Union Pacific (UNP.N) is exploring a deal to acquire rival Norfolk Southern (NSC.N), the Wall Street Journal reported on Thursday, a merger that could create an industry behemoth and draw intense regulatory scrutiny.
Norfolk's shares rose 4% in extended trading.
The talks were at an early stage and there was no guarantee that they would result in any deal or get regulatory approval, the Journal said, citing people familiar with the matter.
Union Pacific and Norfolk Southern did not immediately respond to Reuters requests for comment.
The potential acquisition would create a railroad giant with a combined market value of roughly $200 billion, further consolidating an industry that has already shrunk from dozens of major carriers to just a handful over the past several decades.
The news comes a day after Semafor reported Union Pacific was working with Morgan Stanley to explore an acquisition of a rival.
Reuters could not immediately confirm either reports.
A deal of this scale would require approval from the Surface Transportation Board (STB), a regulatory body which oversees railroads. It would need the support of worker unions as well.
The STB had approved Canadian Pacific's $31 billion acquisition of Kansas City Southern in 2023 with multiple conditions and an unprecedented seven-year oversight period, marking the most stringent regulatory monitoring ever imposed on a major railroad merger.
