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"It's a great big rollin' railroad . . . " sings the Union Pacific "choir" and assuming the proposed merger between the U.P. and the Southern Pacific goes through, U.P.R.R. Chairman Richard K. Davidson promises it will be even bigger than that: "The greatest railroad in the world."

Not a bad claim considering that Davidson and U.P.R.R. lost out last year to Burlington Northern in the highly publicized bidding war between U.P. and B.N. to acquire the Santa Fe Pacific system - a battle that B.N. won and which temporarily cost U.P. the status of being the nation's largest railroad in terms of revenues.The S.P. deal will reverse that fortune.

Coming off the rebound, U.P. bought the Chicago & North Western Transportation Co. earlier this year, but that was nothing compared to the Southern Pacific deal. If approved by mid-1996, as Davidson expects, the loss of the Santa Fe will seem providential.

It already does.

"The Southern Pacific was actually a better fit for us," said Davidson Thursday in an interview. "The synergies of the deal here are far superior to what the Santa Fe would have been."

Is the merger good for Utah? It shouldn't hurt. U.P., which is incorporated in Utah, has some 1,500 employees in Utah and the Southern Pacific fewer than 1,000. It's possible that combining the two would result in some job cutbacks, said Davidson, "But it's safe to say there will be no wholesale layoffs."

On the contrary, he said, the merger will allow the U.P. - which will be the surviving company once the deal is completed - to make investments in the combined system that should help business overall in Utah and throughout the enlarged U.P. system.

Not everyone looks on mergers as good news, of course, particularly not the customers of two competing railroads - the U.P. and the S.P. are the only two interstate railroads serving Utah - who suddenly decide to become one noncompeting railroad.

Kennecott and Geneva Steel, in particular, have been concerned over the development, and that is why Davidson was in Salt Lake City Thursday: To emphasize that U.P. won't be the only game in town. Kennecott and its British parent company, RTZ Corp., represent more than $100 million in railroad business.

"We will insert viable competition" into the local market, Davidson told representatives of Kennecott Thursday.

What kind? That remains to be resolved. One way is to grant "trackage rights" to another railroad, which allows them to run trains over someone else's tracks. Another is "haulage" rights in which one railroad, in this case the U.P., agrees to haul the cars of a competitor in its trains to competitive points.

U.P. believes the former solution, a trackage agreement with another carrier, is the way it will fall out. That means another railroad, completely new to Utah, could be doing business in the state next year. Davidson mentioned the Kansas City Southern and Illinois Central as possibilities.

"We're finding a great deal of interest," said Davidson.

And he should know. While he is currently chairman of the U.P. Railroad subsidiary, based in Omaha, Davidson has been tapped as the successor to Drew Lewis to become chairman of Union Pacific Corp. - the holding company for the Railroad, Overnite Transportation Co. (trucking), Union Pacific Technologies and Skyway Freight Systems Inc.

Will Davidson want to take the corporation into other businesses? Not likely. U.P.C. tried that before and the results were not happy. The corporation announced earlier this month that it is going to spin off its oil and gas subsidiary, Union Pacific Resources, in an initial public offering and earlier it got rid of its waste management unit.

"We're going to stick to our knitting: transportation," said Davidson.