Railroads magnates, what do you think of the 85bln $ merger between UNP and NSC merger?

TLDR: Railroad haven’t performed very well in the past years but may still be a solid investment. Do you think the UNP/NSC merger will be value accretive, or are you worried about the price (as a UNP shareholder) and the additional debt of the combined entity?

Railroads have been by far my worse performing investment. I predicted more industrial integration between US, Canada and Mexico and an increase in trade, but boy was I wrong. In addition, I think the economic landscape is shifting to less higher quality products and software, so the volume of goods transported might increase at a slower pace than it has in the last decade (think cars sales for example). Also Business to consumer has lower margins and higher costs.

Still railroads have their infrastructure in place, are clearly cashflow positive, and pay a small dividend every year and buy back a few shares every quarter, so I don’t think they will lose lots of money long term.

Honestly, I am not a fan of NCS reliance on coal (although this administration doesn’t hate the product), and I am a bit concerned of the additional debt taken over by UNP, as well as the 27% share dilution.

However, the management is unlikely to bankrupt such a profitable company, and I can only see advantages owning such a big chunk of US commercial rail long term, at least for shareholders with a massive time horizon.

Curious to hear your thoughts