Union Pacific Corp. could reach an agreement to acquire Norfolk Southern Corp. and create a transcontinental rail behemoth as soon as early next week, people familiar with the matter said.

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 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.