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.
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Shares of Union Pacific fell 4.2% in morning trading, while those of Norfolk were down 5.4%.
The companies’ merger application has been accepted, but proceedings, including the environmental review, have been put on hold, the STB, which has exclusive jurisdiction over railroad mergers, said. The Department of Justice can provide non-binding advice.
“Several aspects of the revised application… are unclear or underdeveloped and require supplementation at this stage,” the STB said.
The companies filed a revised application in April for their merger to create a coast-to-coast U.S. freight rail operator after an initial proposal was sent back in January.
A coalition of business groups, rival railroads and organized labor unions have been opposed to the deal, arguing that it would stifle competition and raise costs for manufacturers, farmers and consumers.
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.
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“Given the fairly narrow procedural question of completeness, issues raised by commenters do not warrant rejecting the revised application,” the board said.
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 had initially planned to close the merger by April next year, but this could be delayed as the board may not reach a decision until September 2027.
Union Pacific and Norfolk Southern did not immediately respond to Reuters’ request for comment.
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)
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