ETFs That Stand to Benefit From the Historic UNP-NSC Merger

Core Viewpoint - Union Pacific has announced an $85 billion cash-and-stock deal to acquire Norfolk Southern, marking the largest railroad merger in history and the biggest M&A transaction of 2025 to date [1][2] Deal Details - NSC shareholders will receive $88.82 in cash and one share of UNP for each share of NSC, with an offer price of $320 per share, representing a total enterprise value of $85 billion and a 25% premium to Norfolk Southern's weighted average share price over the prior 30 days [3] - Norfolk Southern shareholders will hold approximately 27% of the merged company [3] Operational Impact - The merged company will span over 50,000 route miles across 43 states, linking about 100 North American ports, creating a logistics powerhouse valued at over $250 billion [4] - The merger aims to eliminate interchange delays, open new routes, expand intermodal services, and reduce transit times on key rail corridors [4] Financial Projections - The transaction is expected to generate an estimated $2.75 billion in annualized synergies and be EPS-accretive in the second full year after closing, with high single-digit EPS growth projected thereafter [5] - The deal is expected to close by early 2027, following a 16-month statutory review by the Surface Transportation Board [5] Regulatory Environment - The merger is expected to face intense regulatory scrutiny and opposition from major railroad labor unions, citing potential job losses, safety risks, and service disruptions [6] ETFs Benefiting from the Merger - iShares U.S. Transportation ETF (IYT) has significant allocations to UNP and NSC, accounting for 16.1% and 4.8% of total assets, respectively, with a total asset base of $750.6 million [7] - ProShares Supply Chain Logistics ETF (SUPL) includes UNP and NSC among its top holdings, with over 4% share each, and has an asset base of $1 million [8] - Themes US Infrastructure ETF (HWAY) holds NSC and UNP in its top 10 holdings, making up 4.5% and 3.7% share, respectively, with an asset base of $1.2 million [9] - First Trust Nasdaq Transportation ETF (FTXR) also includes NSC and UNP in its top 10 holdings, with 4.4% and 3.6% share, respectively, and an asset base of $30.2 million [10]