Union Pacific (UNP) M&A Announcement summary

Deal rationale and strategic fit

• Creates the first true transcontinental railroad in the U.S., connecting coast to coast and bridging the East-West divide for seamless freight movement, enhancing national competitiveness and supply chain efficiency.

• Enables modal conversion by shifting over 2 million annual truckloads to rail, reducing highway congestion and emissions, and reversing rail's market share loss to trucking.

• Unlocks new growth opportunities for shippers, supports reindustrialization, and expands service offerings with new intermodal and manifest train routes.

• Provides direct, reliable access to over 100 ports and 10 international gateways, supporting global trade.

• Supported by over 2,000 stakeholders, including shippers, public officials, industry groups, and 99% shareholder approval at both companies.

Financial terms and conditions

• Expects up to $2 billion in net revenue and EBITDA synergies by year three, with nearly $1 billion in cost synergies identified.

• $2.1 billion in incremental capital investment planned over three years, including $1 billion for capacity and $1.1 billion for technology and other investments.

• Combined 2025 capital investment of $5.6 billion, with a long-term leverage target of ~2.8x by Year 2 and annual free cash flow exceeding $12 billion by Year 3.

• Annual capital synergies of $133 million projected through more efficient network and fleet use.

• Share repurchases to resume after debt targets are met, growing to $10 billion+ annually by Year 3.

Synergies and expected cost savings

• Streamlined network to eliminate 2,400 daily handlings and save 60,000 car miles per day, with almost 900,000 fewer annual handlings and 1.7 million fewer train miles.

• Efficiency gains from shared best practices, technology, and reduced purchased services, with rationalization of SG&A costs.

• Improved asset utilization and reduced equipment costs for customers, with unified digital experience and streamlined pricing.

• Annual capital synergies of $133 million by Year 3.