Union Pacific Corp. is nearing an agreement for a stock-and-cash deal for Norfolk Southern Corp. that would value the smaller rival at about $320 a share, people familiar with the matter said, in what would be the rail industry’s biggest-ever tie-up.

Union Pacific and Norfolk Southern could announce a tentative merger agreement as early as this week, according to a published report. Bloomberg cited sources familiar with the talks in its report on Friday.

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