FKConvexElem::CalcAABB was ignoring the elements currently defined transform, and only scaling. This means that any actor that has a transform (not just Merge Actors) could potentially have very distorted bounding volumes.
However, since placement and collisions don't rely on the bounding box, this issue may not be readily noticeable by users unless they are explicitly using the bounding box for logic.
1. Create a new project (can be BP only).
2. If not already enabled, enabled Actor Merging.
a. Edit -> Editor Preferences... -> Experimental -> Tools -> Actor Merging (Checked).
3. Place a StaticMeshActor in the world.
These can be builtins like Cubes, Cones, etc.
4. Change it's location somewhere away from origin.
Use some large offset like (1000, 1000, 1000), as it makes it easily visible.
5. Select the StaticMeshActor, and create a copy by holding alt and dragging off of it.
5. Select both Actors, and open the Merge Tool.
Window -> Expiremental -> Merge Actors.
6. In the Merge Actors tool, use the first tab and select the following options:
Pivot Point At (0,0,0)
Merge Physics Data
7. Merge the actors.
8. Open the Static Mesh Editor by double clicking the newly created mesh.
9. Make bounds visible by clicking the "Bounds" option in the top toolbar.
a. Without the fix, the bounds will not only include the mesh and collision data, but also be
bloated to include the objects origin.
b. With the fix, the bounds will properly only wrap the mesh and collision data.
There's no existing public thread on this issue, so head over toAnswerHub just mention UE-29525 in the post.