North America Railroads: UP-NS faces difficult challenge in STB response: Thoughts on walking the line to protect merger synergies

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North America Railroads: UP-NS faces difficult challenge in STB response: Thoughts on walking the line to protect merger synergies

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20 Jul 2026 06:48:15 ET │ 15 pages

North America Railroads

UP-NS faces difficult challenge in STB response: Thoughts on walking

the line to protect merger synergies

Ariel Rosa AC

CITI'S TAKE +1-212-816-5874

Union Pacific and Norfolk Southern both report earnings on Thursday ari.rosa@citi.com

(7/23). We find it noteworthy (and likely not coincidental) that both Ben Mohrcompanies will report on the same day for only the fourth time since 2018.

As discussed in our 2Q26 preview, we expect strong results from both rails, +1-212-816-2110

with a compelling pricing opportunity extending into 2027. Nevertheless, ben.mohr@citi.com

the focus of earnings will likely be on the pending response to the STB’s Adrian Baran

request for additional information following the conditional approval of its +1-212-816-2920initial merger application. We believe there is a good chance that UP-NS will

file its second response Thursday morning pre-earnings. STB has presented adrian.baran@citi.com

UP-NS with a difficult challenge in recommending appropriate remediation

if it falls short of its targets post-merger. We consider possible responses,

with a view that UP-NS taking a more aggressive stance would help protect

synergies, despite a potentially more contentious review process.

Difficult task ahead for UP-NS — Citi’s Event Driven desk recently estimated the

probability of the merger closing at 55-60%. We find this reasonable, but also

believe it is partly contingent on the concessions UP-NS are willing to extend to

various stakeholders. Whereas it will result in a more contentious merger review