Merges two adjacent shards in a stream and combines them into a single shard to reduce the stream's capacity to ingest and transport data. Two shards are considered adjacent if the union of the hash key ranges for the two shards form a contiguous set with no gaps. For example, if you have two shards, one with a hash key range of 276...381 and the other with a hash key range of 382...454, then you could merge these two shards into a single shard that would have a hash key range of 276...454. After the merge, the single child shard receives data for all hash key values covered by the two parent shards.

MergeShards is called when there is a need to reduce the overall capacity of a stream because of excess capacity that is not being used. You must specify the shard to be merged and the adjacent shard for a stream. For more information about merging shards, see Merge Two Shards in the Amazon KinesisDeveloper Guide.

If the stream is in the ACTIVE state, you can call MergeShards. If a stream is in the CREATING, UPDATING, or DELETING state, MergeShards returns a ResourceInUseException. If the specified stream does not exist, MergeShards returns a ResourceNotFoundException.

You can use DescribeStream to check the state of the stream, which is returned in StreamStatus.

MergeShards is an asynchronous operation. Upon receiving a MergeShards request, Amazon Kinesis immediately returns a response and sets the StreamStatus to UPDATING. After the operation is completed, Amazon Kinesis sets the StreamStatus to ACTIVE. Read and write operations continue to work while the stream is in the UPDATING state.

You use DescribeStream to determine the shard IDs that are specified in the MergeShards request.

If you try to operate on too many streams in parallel using CreateStream, DeleteStream, MergeShards or SplitShard, you will receive a LimitExceededException.

MergeShards has limit of 5 transactions per second per account.

http://docs.aws.amazon.com/kinesis/latest/APIReference/API_MergeShards.html