This makes as much sense as the FTC or the DoJ allowing United+Continental to merge with American Airlines, Delta and US Airways, plus throwing in Southwest, Jet Blue, Alaska, Hawaiian and Air Canada.

The remaining Class 1 rails have strong near-monopoly positions in their markets. Worst-case, they operate in duopolies. Warren Buffett said one reason he bought BNSF was because it had excellent pricing power, i.e. it could raise prices and make them stick. (Midwest grain farmers are furious with the high rates, but there is not much they can do, because they are served by 1 railroad and trucking grain is too costly.)

I don't see it happening, I don't think such a mega-merger would be approved, and if, on the incredibly small chance it's being discussed, people who knew wouldn't talk.