REPORT: INVESTMENT FIRM ADVISING UNION PACIFIC ON POTENTIAL RAIL MERGER

Union Pacific is working with Morgan Stanley investment bankers to provide guidance on the potential acquisition of another Class I railroad, the online publication Semafor reported on Wednesday, citing people familiar with the matter.

Union Pacific (NYSE: UNP) and Morgan Stanley (NYSE: MS) declined to comment to the media outlet. CSX and Norfolk Southern stock prices surged on the news, while UP’s declined.

Union Pacific Chief Executive Jim Vena has touted the potential benefits of a transcontinental merger while acknowledging the regulatory obstacles to any deal.

The Surface Transportation Board adopted more rigorous merger review rules in 2001 after rapid consolidation in the industry during the 1990s, including the Burlington Northern-Santa Fe and Union Pacific-Southern Pacific mergers as well as the CSX (NASDAQ: CSX)-Norfolk Southern (NYSE: NSC) deal to carve up Conrail.

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