Railroad operator Union Pacific is exploring a deal to buy smaller rival Norfolk Southern, the Wall Street Journal reported, in a merger that would bolster the industry leader's heft and likely draw intense regulatory scrutiny.

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.

Union Pacific is reportedly considering acquiring a rival railroad, sending shares of CSX and Norfolk Southern higher.