The blockbuster deal raises the odds that Buffett’s Berkshire Hathaway, which owns the Burlington Northern Santa Fe railroad, will reach a deal with CSX to create a second transcontinental railroad. Union Pacific and BNSF compete in the western U.S., while CSX and Norfolk Southern are the two big Eastern railroads.

Union Pacific said on July 29 that it had agreed to buy smaller rival Norfolk Southern for $85 billion, including debt, in a deal that would create the first transcontinental U.S. railroad.

The $85 billion deal announced on Tuesday would create the nation's first coast-to-coast freight rail operator and reshape the movement of goods from grains to autos across the U.S., which are issues ...