What many considered unthinkable just a few years ago could become a reality. According to multiple reports, Union Pacific and BNSF Railway have hired banks to provide financial advice on potential mergers with their eastern Class I counterparts, Norfolk Southern and CSX Transportation. 

The slow drip of merger news began on July 16, when Semafor reported that UP had hired Morgan Stanley to explore the possibility of acquiring one of the other five Class I railroads, most likely one of the two eastern roads. Later that day, it was reported that UP had been in talks with NS about a potential merger since the beginning of the year. Then, on July 21, Semafor reported that BNSF had enlisted Goldman Sachs for its own merger bid. Reuters later reported that CSX was its target. 

So far, none of the railroads have publicly commented on the matter, although some observers believe that the news tips are coming from within the railroads themselves to see how the stock market and government regulators respond to the idea. 

While railroads themselves did not comment on the rumors as this issue went to press, the man who might matter the most when it comes to the future of BNSF did. The day after Semafor and Reuters reported that the Class I was getting into the merger mix, the owner of BNSF’s parent company, Berkshire Hathaway’s Warren Buffett, told CNBC that  he had not spoken to anyone about the prospect of a merger. Nor had anyone spoken with his chosen successor, Greg Abel, who is set to replace him as CEO at the end of this year. Buffett also added that he would not seek the advice of an outside bank as it would have a financial incentive to make a big deal.

While the 94-year-old billionaire would have considerable sway over what BNSF does, it would appear unlikely that the Class I railroad — UP’s chief rival in the western United States — would sit on the sidelines if UP were to make a serious attempt at either NS or CSX, for fear of being boxed out.

The news that UP and BNSF are planning to start what could be the final round of railroad mergers comes just two years after Canadian Pacific and Kansas City Southern completed what many believed would be the “final” merger. That merger between North America’s smallest Class I railroads was not governed by a more strict set of merger rules drafted in 2001 after the merger mania of the 1990s. However, any future consolidations would need to meet that higher standard to ensure they serve the public interest. At the time of the CP-KCS merger, the U.S. Surface Transportation Board seemed cautious about any further consolidation, especially with Chairman Martin J. Oberman leading. But some believe that Patrick Fuchs, the 37-year-old appointed to the board in 2019 by President Donald Trump who now serves as its chair, might be more open to the idea of additional mergers. 

—Justin Franz