Merck plans to move headquarters from Kenilworth back to Rahway

RAHWAY / KENILWORTH, NJ — Merck announced last week that it will be consolidating its New Jersey operations into a single headquarters in Rahway by the end of 2023. While this is a boon for Rahway, it is a blow for Kenilworth, which has served as the home of Merck’s headquarters since 2015.

Not answering specific questions, a Merck spokesperson sent the following statement to LocalSource.

“On Tuesday, April 28, we announced our intention to consolidate our New Jersey campuses into a single New Jersey location in Rahway,” spokesperson Jessica Fine said. “Rahway, the birthplace of life-changing scientific breakthroughs that have improved human health over the last century, will once again be Merck’s global headquarters by the end of 2023. The consolidation of sites will allow us to bring all our divisions and their leadership teams together to create a more modern environment centered around science and innovation. We remain committed to New Jersey and invested in the state as the home of our global headquarters.”

Over the past several years, Merck’s 210-acre Rahway site has shifted from being primarily a production complex to one that is more focused on research.

“One of my top priorities since taking office as mayor has been to further develop our relationship with Merck, Rahway’s single largest landowner and tax-paying entity,” Rahway Mayor Raymond Giacobbe Jr. told LocalSource. “This renewed commitment to our community will bring hundreds of additional jobs, new facilities on their Rahway campus, and an increase in visitors to our downtown and surrounding areas, all of which will positively impact our local economy.”

Giacobbe is especially proud of Merck recognizing Rahway as “the birthplace of life-changing scientific breakthroughs.”

“Merck has roots in Rahway dating back to 1917, and our city served as its global headquarters until 1992,” he said. “This renewed commitment to Rahway represents a major step in our progress as a city, and I look forward to our continued and expanded partnership.”

Merck moved its headquarters from Rahway to Whitehouse Station in 1992, then from Whitehouse Station to its current 100-acre site in Kenilworth in 2015.

“When Merck decided, years ago, to move its corporate headquarters to Kenilworth, the borough bent over backwards to accommodate the corporate entity,” Kenilworth Mayor Linda Karlovitch told LocalSource. “Upon the completion of the new move, I am confident other potential corporate entities will see an ideal location with the ready access to the parkway, points west and of course New York.”

Karlovitch is relying on Kenilworth’s drawing power — the same drawing power that brought Merck there in the first place — to bring new opportunities to the borough as Merck enacts the move.

“It is unclear what the impact will be in the final result of Merck relocating out of Kenilworth. The two-year window for the movement is a long time period,” she said. “We have already planned to engage the state economic advisers to assist us in the changeover. This will mean a review of the property tax implications. Because of the unique zoning granted to Merck it will be necessary to see what modifications are needed for our land use requirements.”

Despite the company’s decision to move to Rahway, Karlovitch pointed out that Merck’s stay in Kenilworth has been profitable for the company.

“It is interesting to note that prior to COVID-19, the company proclaimed net income of $3.2 billion and a 13-percent increase in earnings per share. It’s fair to say that during their time in Kenilworth the company flourished,” Karlovitch said. “For Merck CEO Ken Frazier, the stay in Kenilworth has been profitable. In 2019, Frazier’s total compensation hit $27.65 million up from $20.93 million in 2018, according to a securities filing.”

Nevertheless, Karlovitch believes the next company to come to Kenilworth will find equal success. But in the meantime, she and borough officials are looking for ways to protect Kenilworth’s interests.

“The borough will be exploring options to ensure we are protected,” she said. “We will keep moving forward.”