Union Pacific Corp. is exploring an acquisition of Norfolk Southern Corp., setting up what could rank as the largest railroad deal ever, according to people familiar with the matter.

The talks are at an early stage and there’s no guarantee the companies will reach a deal, the people said, asking not to be identified because the information is private.

A deal would merge the No. 1 and No. 5 North American railroads by revenue, companies with a combined market value of almost $200 billion.

Shares of Norfolk Southern, which has a market capitalization of about $61 billion, rose 4.4% after regular trading July 17 in New York. Union Pacific, valued at $136 billion, was up 0.2%.

Representatives for Union Pacific and Norfolk Southern declined to comment. The talks were reported earlier by the Wall Street Journal.

A deal for Norfolk Southern would transform the North American rail market, marrying Union Pacific’s network across the western US with Norfolk’s East Coast routes. It would also heap competitive pressure on rivals CSX Corp. and Berkshire Hathaway Inc.’s BNSF.

After years of consolidation in the industry, any rail merger likely would be heavily scrutinized by regulators.

Mergers of the handful of large North American railroads are relatively rare, in part because of the challenge of receiving regulatory approval. Canadian Pacific in 2023 closed a deal for Kansas City Southern valued at about $31 billion.

Speculation has been growing about a large merger in the North American rail industry under the assumption that the government will be more amenable to consolidation under President Donald Trump.

Union Pacific chief executive officer Jim Vena said at an industry conference in June that he would like to do large-scale M&A, but acknowledged the complex political and regulatory hurdles for any such deal.

“It’s not easy. It’s complicated,” he said. “Bottom line is, do I, Jim Vena, think that a merger would be beneficial for the country? Absolutely.”

At the same conference, Jason Zampi, Norfolk Southern’s chief financial officer, also expressed support for a merger of two transcontinental railroads.

“It seems like there would be a lot of benefit there,” Zampi said. “The regulatory environment is, and really the political environment are, kind of the two things we have to work through.”