Railroad operator Union Pacific is holding talks to acquire its smaller rival Norfolk Southern in what would be a megamerger in the railroad industry, according to people familiar with the matter.

Union Pacific and Norfolk Southern are in merger talks to create the largest railroad in North America that would connect the East and West Coasts. The merger discussions began during the first quarter of this year,

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.