M&A chatter swirls around Union Pacific and Norfolk Southern. This is why a deal makes sense. Merger talk is swirling around Union Pacific Corp. and Norfolk Southern Corp. in a deal that could create a railroad mega-carrier and a huge transcontinental network spanning the U.S.

A merger would be likely to face major regulatory scrutiny. CSX Corporation ( NASDAQ: CSX) has a market cap of over $62 billion, and Norfolk Southern ( NYSE: NSC) has a market cap of over $59 billion.

Union Pacific Corp. is exploring an acquisition of Norfolk Southern Corp., the Wall Street Journal reported, setting up what could rank as the largest railroad deal ever. The talks are at an early stage and there’s no guarantee they will reach a deal, according to the report, which cited unidentified people familiar with the matter.