We'll be posting more information here as the week goes on, but it is official!
The server merge will include all of our Renewal servers, Ymir Yggdrassil and Valkrie and will be merging them together into a single Renewal server.
This is a massive undertaking, which is one of the reasons why it's taken longer to set up than we had originally projected. Issues about storage and character overflow are significant, and were the major focus of the development that HQ was working on for the last few months.
The merger will occur beginning on December 18th, 2012.
After the merger, There will be a new second and third storage for yggdrassil and valkyrie stored items. Players will be able to remove items from these but will not be able to place items back in, and the extra storages will eventually disappear.
From the current max of nine characters, the limit will increase to 27 to accommodate the additional characters. If the characters are deleted or if the player does not have full character rosters, they will still only be able to create up to nine characters (if VIP).