From someone who has actually been a part of a merger:

My old LS was slowly dying out due to several reasons. There was another LS whom had similar problems, and we were good friends with each other. Each LS had a vote, and eventually decided to merge. It was awesome while it lasted; in fact I probably wouldn't have gotten my E.Body from Odin without it.

However, time goes on and the skeptics about said merger were right-it was going to shit. Eventually I left months before the collapse and warned the LS to get their shit together or the LS isn't going to be around much longer. And behold, I was right. :\

I have yet to see a single successful LS merger for any type of event in this game.