Merck signs 20-year lease in Delaware following $30M state incentive

In February, Delaware enticed Merck & Co. with a $30 million taxpayer grant to expand its manufacturing operation in the state. A month later, the pharmaceutical giant signed a 20-year lease at a location in Chestnut Run, just outside of Wilmington, according to county property records.

On March 25, officials from Merck and from a development company that owns the Chestnut Run property, next to DuPont’s Delaware headquarters, signed a “memorandum of lease,” which describes a 20-year lease that begins in February. 

It did not disclose the rent that Merck will pay to the owner of the biotech-focused property, called the Chestnut Run Innovation and Science Park, or CRISP.

A memorandum of lease is a legal document, separate from a lease, that signals to lenders and investors the existence of a new lease and tenant. 

When Merck officials presented the project to Delaware’s economic development office in February, they said that if they chose Delaware for their next manufacturing site, the company would invest $900 million into a “multi-building complex” that would be fully operational by 2030 and employ 375 people.

Roughly $330 million of that amount would fund construction of new buildings, according to company documents submitted to the state. Another $290 million would pay for equipment and machinery. And $80 million more would cover the costs of what the company calls “furniture, fixtures, inventory, etc.”

Merck did not respond to a request for comment on Thursday. A representative from the Pennsylvania-based development firm MRA Group, which owns CRISP, also did not respond to requests for comment.

Merck, a global pharmaceutical company with a market cap of over $200 billion, already has a manufacturing presence in southern Delaware. The company produces a wide array of drugs and vaccines, in addition to animal health products.

State officials and Merck have yet to publicly announce a move to Delaware. The massive $30 million grant is one of the largest investments by the state into a private company in recent memory.

It could be among the last of its kind in the near future.

Not long before the February approval for $30 million to Merck, Gov. Matt Meyer announced to a room full of Delaware executives that he would pump the brakes on large state investments to major companies.

Instead, he said his office would focus on sending state support to small businesses.

“In my administration, you’re going to see the use of this cash assistance de-emphasized. Let’s focus our resources on things that matter the most to the companies and employees of today and tomorrow,” Meyer said during a speech in front of the Delaware State Chamber of Commerce in January.

Earlier this month, Meyer told Spotlight Delaware that all major economic development grants approved under his administration were negotiated under his predecessor, Gov. John Carney. Meyer’s team did weigh whether to nix the deals, but ultimately decided to allow them to proceed, he said.

When reached by Spotlight Delaware, a spokeswoman for Meyer declined to comment on Merck’s lease.

On Thursday, Meyer’s office announced what it said was an “urgent need” to distribute $14 million in federal small business loans before the end of 2025. 

According to a press release announcing the funding blitz, the U.S. Treasury Department awarded Delaware $60.9 million in 2023 to be distributed in three allocations. The release said Delaware received its first $20 million and must spend 80% of that to access its next allocations.

Delaware’s Council on Development Finance, which approved Merck’s grant in February, makes its awards based, in part, on recommendations from a public-private entity governed by prominent business leaders, state legislators and Meyer.

That entity, the Delaware Prosperity Partnership, is a state-chartered, public-private entity first established under Carney to attract business development to the state.

In a statement to Spotlight Delaware after Merck’s award, the Delaware Prosperity Partnership said it’s “thrilled” to see Merck considering an expansion in the state.

“Merck has a strong record of success, including developing medicines to help heal the world,” a spokesperson for the group said. “This project would reinforce Delaware’s standing in the global biopharmaceutical ecosystem, and we are excited by the potential opportunities it would provide Delaware residents and businesses.”