The combination of two large rail companies would create the first coast-to-coast network, but the deal could reduce competition.

Union Pacific and Norfolk Southern confirmed that they are in “advanced” merger talks that would create a single U.S railroad with service stretching from the East to the West Coast. The Associated Press reported last week that the companies were discussing a tie-up but neither company acknowledged that until Thursday morning.

Union Pacific (NYSE:UNP) was raised to buy from hold at Jefferies after the railroad operator confirmed it was in talks with Norfolk Southern (NYSE:NSC) about a business combination. Investors should start building a position in Union Pacific (NYSE:UNP) to "get in on the ground level" on what is likely a "transformational" combination,