So rather than lunge into a merger, why not just switch to a preferential ballot? The Liberals and NDP could still run as two separate parties. Voters could rank them 1-2 on their ballot, ending the vote split. And if they get enough seats to justify it, they could sign a working agreement, or enter into a coalition government.
I don't see any drawbacks. If the concern is that Liberals wouldn't rank the NDP second and New Democrats wouldn't rank the Liberal Party second (a valid concern)...well then...I tend to think that's an even stronger argument against a merger.