I have been using Beyond Compare to do merges and general comparisons (including comparing directories when rolling code) for a few years now. It has a three-way merge capability which takes into account the common parent version to the two versions of the file being compared, which makes merging far more accurate than with a two-way process.
In addition to integrating with the Windows context menu (right-click: Compare), it is possible to set Visual Studio to use this as its compare / merge application. Instructions here (under Beyond Compare 3).
TLDR: Download Beyond Compare, try for 30 days, decide if you want it long-term. End up buying it because it is amazing.