Union Pacific is working with Morgan Stanley investment bankers to provide guidance on the potential acquisition of another Class I railroad, the online publication Semafor reported on Wednesday, citing people familiar with the matter.

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.

Union Pacific currently has a market value of about $140 billion, while Norfolk Southern is valued at around $60 billion. Following news of the negotiations, shares of Norfolk Southern rose by 4% in after-hours trading, while Union Pacific’s stock fell roughly 2% before reversing to a slight gain.