Merge actor issue with similar materials

Open the attached project

Select both red cubes, they each have a different material instance applied to them.

In the main menu, go in "Actor -> Merge Actors (2) -> Merge"

Result: A broken mesh is generated... The static mesh editor is showing a single mesh section, but the mesh seems to have a second one with no material assigned to it.

Expected: If the materials are deemed equivalent, there should be a single mesh section and both cubes should be red. If they are different, there should be two section, each with their own material.