Exclusive: Union Pacific executives privately deny talks with Trump over 15% stake

The Scoop

Executives at Union Pacific privately told big investors last week that the company hadn’t talked to President Donald Trump about taking a 15% stake in the company, despite Trump’s claims otherwise, according to people involved in those conversations.

Trump said he wanted the US government to take an ownership stake in a combined Union Pacific-Norfolk Southern, which announced a $85 billion railroad merger last year and is currently facing a protracted regulatory review. “So they said ‘No,’ but they’ll say ‘Yes,’” the president said in a May interview in Fortune.

Union Pacific CFO Jennifer Hamann dismissed the president’s remarks, saying that the company hadn’t had conversations with Trump about a stake and that the comments took executives by surprise, the people said.

A spokesperson for Union Pacific declined to comment. “The Administration is reviewing this proposed transaction and is committed to an outcome that will benefit the American people and ensure a safe, competitive, and efficient freight-rail sector,” an administration official said.

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Rohan’s view

Trump’s public demands for a sizable stake in a combined Union Pacific-Norfolk Southern mark his most aggressive and open push to exert influence over a private company. Whether Union Pacific CEO Jim Vena wants to give the government a stake or not, Trump usually gets what he wants from his CEO supplicants (cases in point: Intel, Nippon Steel, etc.)

For its part, Union Pacific has to manage a high-wire act, balancing a regulator hellbent on staying neutral with a president keen to flex his dealmaking muscles. The company is now at risk of muddying the waters with both, in an effort to keep investors happy. Union Pacific hasn’t commented publicly on the president’s remarks, but risks infuriating the president by denying them privately to investors all the same.

So why bother? Unlike most US deals which require approval from the Federal Trade Commission and/or the Justice Department, railroads have their own specialized monopoly regulator — the Surface Transportation Board — with its own esoteric rules. And the man atop that regulator, Patrick Fuchs, is a Trump appointee with sterling Republican bona fides (he used to work for Senate Majority Leader John Thune) who says he’s committed to a careful, fair interpretation of the law.

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Some investors have told me they’re growing increasingly worried that Union Pacific is mismanaging the merger review process by focusing too heavily on its relationship with the president, who called Vena a “very impressive guy.”

Room for Disagreement

Union Pacific can’t afford to ignore the president — even if actions by railroad regulators suggest otherwise. When Union Pacific lobbed its bid for Norfolk Southern, it smartly presented the deal as crucial for national security. If the Paramount-Warner Bros. deal has shown us anything, it’s that M&A in the US is more political than ever and the most political animal of them all is President Trump.

Semafor’s Eleanor Mueller contributed to this report.

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