$ hg init issue29
$ cd issue29
$ echo a > a
$ hg ci -Ama
adding a
$ echo b > b
$ hg ci -Amb
adding b
$ hg up 0
0 files updated, 0 files merged, 1 files removed, 0 files unresolved
$ mkdir b
$ echo b > b/b
$ hg ci -Amc
adding b/b
created new head
$ hg merge