diff --git a/Gemfile.lock b/Gemfile.lock
index 643c513161f6037b1cf7576f106994b880e8fb09..53d21b26e974984f4caf7ee43d8ccad808973b5e 100644
--- a/Gemfile.lock
+++ b/Gemfile.lock
@@ -875,4 +875,4 @@ DEPENDENCIES
   wikicloth (= 0.8.1)
 
 BUNDLED WITH
-   1.10.4
+   1.10.5
diff --git a/app/assets/javascripts/merge_request_widget.js.coffee b/app/assets/javascripts/merge_request_widget.js.coffee
index c68a2a9d047448316669d95f2bd286640aed80cf..762eec63dee317e3501cacbd287512abb2db1069 100644
--- a/app/assets/javascripts/merge_request_widget.js.coffee
+++ b/app/assets/javascripts/merge_request_widget.js.coffee
@@ -19,7 +19,7 @@ class @MergeRequestWidget
           when 'merged'
             location.reload()
           else
-            setTimeout(merge_request_widget.mergeInProgress, 2000)
+            setTimeout(merge_request_widget.mergeInProgress, 3000)
       dataType: 'json'
 
   getMergeStatus: ->
diff --git a/app/controllers/projects/compare_controller.rb b/app/controllers/projects/compare_controller.rb
index d9b3adae95b28cdf34fe77771a5b5d277ac411d3..c5f085c236f70d4acb35f4d9a92d77130f7fb870 100644
--- a/app/controllers/projects/compare_controller.rb
+++ b/app/controllers/projects/compare_controller.rb
@@ -13,8 +13,13 @@ class Projects::CompareController < Projects::ApplicationController
     base_ref = Addressable::URI.unescape(params[:from])
     @ref = head_ref = Addressable::URI.unescape(params[:to])
 
-    compare_result = CompareService.new.
-      execute(@project, head_ref, @project, base_ref)
+    compare_result = CompareService.new.execute(
+      current_user,
+      @project,
+      head_ref,
+      @project,
+      base_ref
+    )
 
     @commits = compare_result.commits
     @diffs = compare_result.diffs
diff --git a/app/controllers/projects/merge_requests_controller.rb b/app/controllers/projects/merge_requests_controller.rb
index f3054881dafd02d41bdbac7c92b6d08df802524f..d12651983187b65eb4a14e88704a1ea49a33b332 100644
--- a/app/controllers/projects/merge_requests_controller.rb
+++ b/app/controllers/projects/merge_requests_controller.rb
@@ -1,7 +1,9 @@
+require 'gitlab/satellite/satellite'
+
 class Projects::MergeRequestsController < Projects::ApplicationController
   before_action :module_enabled
   before_action :merge_request, only: [
-    :edit, :update, :show, :diffs, :commits, :merge, :merge_check,
+    :edit, :update, :show, :diffs, :commits, :automerge, :automerge_check,
     :ci_status, :toggle_subscription
   ]
   before_action :closes_issues, only: [:edit, :update, :show, :diffs, :commits]
@@ -135,7 +137,7 @@ class Projects::MergeRequestsController < Projects::ApplicationController
     end
   end
 
-  def merge_check
+  def automerge_check
     if @merge_request.unchecked?
       @merge_request.check_if_can_be_merged
     end
@@ -145,11 +147,11 @@ class Projects::MergeRequestsController < Projects::ApplicationController
     render partial: "projects/merge_requests/widget/show.html.haml", layout: false
   end
 
-  def merge
+  def automerge
     return access_denied! unless @merge_request.can_be_merged_by?(current_user)
 
-    if @merge_request.mergeable?
-      MergeWorker.perform_async(@merge_request.id, current_user.id, params)
+    if @merge_request.automergeable?
+      AutoMergeWorker.perform_async(@merge_request.id, current_user.id, params)
       @status = true
     else
       @status = false
diff --git a/app/models/merge_request.rb b/app/models/merge_request.rb
index 631a2d887cc541091e8da66670a654118fdaca9f..1ef76d167006132030da6c04469f1b560419ecd3 100644
--- a/app/models/merge_request.rb
+++ b/app/models/merge_request.rb
@@ -41,6 +41,8 @@ class MergeRequest < ActiveRecord::Base
 
   delegate :commits, :diffs, :last_commit, :last_commit_short_sha, to: :merge_request_diff, prefix: nil
 
+  attr_accessor :should_remove_source_branch
+
   # When this attribute is true some MR validation is ignored
   # It allows us to close or modify broken merge requests
   attr_accessor :allow_broken
@@ -55,7 +57,7 @@ class MergeRequest < ActiveRecord::Base
       transition [:reopened, :opened] => :closed
     end
 
-    event :mark_as_merged do
+    event :merge do
       transition [:reopened, :opened, :locked] => :merged
     end
 
@@ -204,7 +206,11 @@ class MergeRequest < ActiveRecord::Base
 
   def check_if_can_be_merged
     can_be_merged =
-      project.repository.can_be_merged?(source_sha, target_branch)
+      if for_fork?
+        Gitlab::Satellite::MergeAction.new(self.author, self).can_be_merged?
+      else
+        project.repository.can_be_merged?(source_branch, target_branch)
+      end
 
     if can_be_merged
       mark_as_mergeable
@@ -221,6 +227,18 @@ class MergeRequest < ActiveRecord::Base
     self.target_project.events.where(target_id: self.id, target_type: "MergeRequest", action: Event::CLOSED).last
   end
 
+  def automerge!(current_user, commit_message = nil)
+    return unless automergeable?
+
+    MergeRequests::AutoMergeService.
+      new(target_project, current_user).
+      execute(self, commit_message)
+  end
+
+  def remove_source_branch?
+    self.should_remove_source_branch && !self.source_project.root_ref?(self.source_branch) && !self.for_fork?
+  end
+
   def open?
     opened? || reopened?
   end
@@ -229,11 +247,11 @@ class MergeRequest < ActiveRecord::Base
     title =~ /\A\[?WIP\]?:? /i
   end
 
-  def mergeable?
+  def automergeable?
     open? && !work_in_progress? && can_be_merged?
   end
 
-  def gitlab_merge_status
+  def automerge_status
     if work_in_progress?
       "work_in_progress"
     else
@@ -260,14 +278,14 @@ class MergeRequest < ActiveRecord::Base
   #
   # see "git diff"
   def to_diff(current_user)
-    target_project.repository.diff_text(target_branch, source_sha)
+    Gitlab::Satellite::MergeAction.new(current_user, self).diff_in_satellite
   end
 
   # Returns the commit as a series of email patches.
   #
   # see "git format-patch"
   def to_patch(current_user)
-    target_project.repository.format_patch(target_branch, source_sha)
+    Gitlab::Satellite::MergeAction.new(current_user, self).format_patch
   end
 
   def hook_attrs
@@ -418,30 +436,4 @@ class MergeRequest < ActiveRecord::Base
       "Open"
     end
   end
-
-  def target_sha
-    @target_sha ||= target_project.
-      repository.commit(target_branch).sha
-  end
-
-  def source_sha
-    commits.first.sha
-  end
-
-  def fetch_ref
-    target_project.repository.fetch_ref(
-      source_project.repository.path_to_repo,
-      "refs/heads/#{source_branch}",
-      "refs/merge-requests/#{id}/head"
-    )
-  end
-
-  def in_locked_state
-    begin
-      lock_mr
-      yield
-    ensure
-      unlock_mr if locked?
-    end
-  end
 end
diff --git a/app/models/merge_request_diff.rb b/app/models/merge_request_diff.rb
index 2177f972ca3cd716944f89c26098f6dd61d3dedd..df1c2b78758225484d2e73c5615a386c784ee266 100644
--- a/app/models/merge_request_diff.rb
+++ b/app/models/merge_request_diff.rb
@@ -16,8 +16,9 @@ require Rails.root.join("app/models/commit")
 class MergeRequestDiff < ActiveRecord::Base
   include Sortable
 
-  # Prevent store of diff if commits amount more then 500
-  COMMITS_SAFE_SIZE = 500
+  # Prevent store of diff
+  # if commits amount more then 200
+  COMMITS_SAFE_SIZE = 200
 
   attr_reader :commits, :diffs
 
@@ -123,12 +124,12 @@ class MergeRequestDiff < ActiveRecord::Base
     if new_diffs.any?
       if new_diffs.size > Commit::DIFF_HARD_LIMIT_FILES
         self.state = :overflow_diff_files_limit
-        new_diffs = new_diffs.first[Commit::DIFF_HARD_LIMIT_LINES]
+        new_diffs = []
       end
 
       if new_diffs.sum { |diff| diff.diff.lines.count } > Commit::DIFF_HARD_LIMIT_LINES
         self.state = :overflow_diff_lines_limit
-        new_diffs = new_diffs.first[Commit::DIFF_HARD_LIMIT_LINES]
+        new_diffs = []
       end
     end
 
@@ -159,21 +160,12 @@ class MergeRequestDiff < ActiveRecord::Base
   private
 
   def compare_result
-    @compare_result ||=
-      begin
-        # Update ref if merge request is from fork
-        merge_request.fetch_ref if merge_request.for_fork?
-
-        # Get latest sha of branch from source project
-        source_sha = merge_request.source_project.commit(source_branch).sha
-
-        Gitlab::CompareResult.new(
-          Gitlab::Git::Compare.new(
-            merge_request.target_project.repository.raw_repository,
-            merge_request.target_branch,
-            source_sha,
-          )
-        )
-      end
+    @compare_result ||= CompareService.new.execute(
+      merge_request.author,
+      merge_request.source_project,
+      merge_request.source_branch,
+      merge_request.target_project,
+      merge_request.target_branch,
+    )
   end
 end
diff --git a/app/models/namespace.rb b/app/models/namespace.rb
index 161a16ca61c49fa83538291fc03f42ed838f63a0..30ffacaddeda00b0d37a71398f5d60773bc39894 100644
--- a/app/models/namespace.rb
+++ b/app/models/namespace.rb
@@ -118,11 +118,12 @@ class Namespace < ActiveRecord::Base
     gitlab_shell.add_namespace(path_was)
 
     if gitlab_shell.mv_namespace(path_was, path)
-      # If repositories moved successfully we need to
-      # send update instructions to users.
+      # If repositories moved successfully we need to remove old satellites
+      # and send update instructions to users.
       # However we cannot allow rollback since we moved namespace dir
       # So we basically we mute exceptions in next actions
       begin
+        gitlab_shell.rm_satellites(path_was)
         send_update_instructions
       rescue
         # Returning false does not rollback after_* transaction but gives
diff --git a/app/models/project.rb b/app/models/project.rb
index 4628f478ca6c5cb808a2fc9c05c32d8b82c8be18..3dc1729e812ebb48a0f83cdd142a7d72e43c502d 100644
--- a/app/models/project.rb
+++ b/app/models/project.rb
@@ -520,6 +520,14 @@ class Project < ActiveRecord::Base
     !repository.exists? || repository.empty?
   end
 
+  def ensure_satellite_exists
+    self.satellite.create unless self.satellite.exists?
+  end
+
+  def satellite
+    @satellite ||= Gitlab::Satellite::Satellite.new(self)
+  end
+
   def repo
     repository.raw
   end
@@ -589,11 +597,14 @@ class Project < ActiveRecord::Base
     new_path_with_namespace = File.join(namespace_dir, path)
 
     if gitlab_shell.mv_repository(old_path_with_namespace, new_path_with_namespace)
-      # If repository moved successfully we need to send update instructions to users.
+      # If repository moved successfully we need to remove old satellite
+      # and send update instructions to users.
       # However we cannot allow rollback since we moved repository
       # So we basically we mute exceptions in next actions
       begin
         gitlab_shell.mv_repository("#{old_path_with_namespace}.wiki", "#{new_path_with_namespace}.wiki")
+        gitlab_shell.rm_satellites(old_path_with_namespace)
+        ensure_satellite_exists
         send_move_instructions
         reset_events_cache
       rescue
@@ -691,6 +702,7 @@ class Project < ActiveRecord::Base
   def create_repository
     if forked?
       if gitlab_shell.fork_repository(forked_from_project.path_with_namespace, self.namespace.path)
+        ensure_satellite_exists
         true
       else
         errors.add(:base, 'Failed to fork repository via gitlab-shell')
diff --git a/app/models/project_services/gitlab_ci_service.rb b/app/models/project_services/gitlab_ci_service.rb
index ecdcd48ae602476d8670fae8352fc7ed14cd718c..5aaa4e85cbcce8c2849b061eeb7b953dac0f8051 100644
--- a/app/models/project_services/gitlab_ci_service.rb
+++ b/app/models/project_services/gitlab_ci_service.rb
@@ -74,8 +74,6 @@ class GitlabCiService < CiService
     else
       :error
     end
-  rescue Errno::ECONNREFUSED
-    :error
   end
 
   def fork_registration(new_project, private_token)
@@ -105,8 +103,6 @@ class GitlabCiService < CiService
     if response.code == 200 and response["coverage"]
       response["coverage"]
     end
-  rescue Errno::ECONNREFUSED
-    nil
   end
 
   def build_page(sha, ref)
diff --git a/app/models/repository.rb b/app/models/repository.rb
index 46efbede2a2fa3e40e8ed4a714e332a19ff23aac..807b33b2a3e515387cb00387680568a83aec0cd0 100644
--- a/app/models/repository.rb
+++ b/app/models/repository.rb
@@ -411,36 +411,15 @@ class Repository
     }
   end
 
-  def can_be_merged?(source_sha, target_branch)
+  def can_be_merged?(source_branch, target_branch)
     our_commit = rugged.branches[target_branch].target
-    their_commit = rugged.lookup(source_sha)
+    their_commit = rugged.branches[source_branch].target
 
     if our_commit && their_commit
       !rugged.merge_commits(our_commit, their_commit).conflicts?
-    else
-      false
     end
   end
 
-  def merge(source_sha, target_branch, options = {})
-    our_commit = rugged.branches[target_branch].target
-    their_commit = rugged.lookup(source_sha)
-
-    raise "Invalid merge target" if our_commit.nil?
-    raise "Invalid merge source" if their_commit.nil?
-
-    merge_index = rugged.merge_commits(our_commit, their_commit)
-    return false if merge_index.conflicts?
-
-    actual_options = options.merge(
-      parents: [our_commit, their_commit],
-      tree: merge_index.write_tree(rugged),
-      update_ref: "refs/heads/#{target_branch}"
-    )
-
-    Rugged::Commit.create(rugged, actual_options)
-  end
-
   def search_files(query, ref)
     offset = 2
     args = %W(git grep -i -n --before-context #{offset} --after-context #{offset} #{query} #{ref || root_ref})
@@ -474,11 +453,6 @@ class Repository
     )
   end
 
-  def fetch_ref(source_path, source_ref, target_ref)
-    args = %W(git fetch #{source_path} #{source_ref}:#{target_ref})
-    Gitlab::Popen.popen(args, path_to_repo)
-  end
-
   private
 
   def cache
diff --git a/app/services/base_service.rb b/app/services/base_service.rb
index f00ec7408b683fb6f00e6c85c38ad04364bfeef3..6d9ed345914b356688422ad6dfbd72bf44d138b0 100644
--- a/app/services/base_service.rb
+++ b/app/services/base_service.rb
@@ -31,10 +31,6 @@ class BaseService
     SystemHooksService.new
   end
 
-  def repository
-    project.repository
-  end
-
   # Add an error to the specified model for restricted visibility levels
   def deny_visibility_level(model, denied_visibility_level = nil)
     denied_visibility_level ||= model.visibility_level
diff --git a/app/services/compare_service.rb b/app/services/compare_service.rb
index 70f642baaaaeca715782c6ca00b967b8c51c66ca..6aa9df4b19444aa24bff360649e71aafa9cc8986 100644
--- a/app/services/compare_service.rb
+++ b/app/services/compare_service.rb
@@ -1,28 +1,27 @@
-require 'securerandom'
-
 # Compare 2 branches for one repo or between repositories
 # and return Gitlab::CompareResult object that responds to commits and diffs
 class CompareService
-  def execute(source_project, source_branch, target_project, target_branch)
-    source_sha = source_project.commit(source_branch).sha
-
-    # If compare with other project we need to fetch ref first
-    unless target_project == source_project
-      random_string = SecureRandom.hex
-
-      target_project.repository.fetch_ref(
-        source_project.repository.path_to_repo,
-        "refs/heads/#{source_branch}",
-        "refs/tmp/#{random_string}/head"
+  def execute(current_user, source_project, source_branch, target_project, target_branch)
+    # Try to compare branches to get commits list and diffs
+    #
+    # Note: Use satellite only when need to compare between two repos
+    # because satellites are slower than operations on bare repo
+    if target_project == source_project
+      Gitlab::CompareResult.new(
+        Gitlab::Git::Compare.new(
+          target_project.repository.raw_repository,
+          target_branch,
+          source_branch,
+        )
       )
-    end
-
-    Gitlab::CompareResult.new(
-      Gitlab::Git::Compare.new(
-        target_project.repository.raw_repository,
+    else
+      Gitlab::Satellite::CompareAction.new(
+        current_user,
+        target_project,
         target_branch,
-        source_sha,
-      )
-    )
+        source_project,
+        source_branch
+      ).result
+    end
   end
 end
diff --git a/app/services/files/base_service.rb b/app/services/files/base_service.rb
index d7b40ee8906b6470e2dc0b5cedbeb818d2702c60..646784f2d9d0dec093b7871b7082534c5bc4897a 100644
--- a/app/services/files/base_service.rb
+++ b/app/services/files/base_service.rb
@@ -33,8 +33,15 @@ module Files
 
     private
 
+    def repository
+      project.repository
+    end
+
     def after_commit(sha, branch)
-      PostCommitService.new(project, current_user).execute(sha, branch)
+      commit = repository.commit(sha)
+      full_ref = "#{Gitlab::Git::BRANCH_REF_PREFIX}#{branch}"
+      old_sha = commit.parent_id || Gitlab::Git::BLANK_SHA
+      GitPushService.new.execute(project, current_user, old_sha, sha, full_ref)
     end
 
     def current_branch
diff --git a/app/services/git_push_service.rb b/app/services/git_push_service.rb
index 81535450ac15f6cc0974f3d6452b7b74c3034197..3511392d1d82b52833f89d6ef5998873a1408379 100644
--- a/app/services/git_push_service.rb
+++ b/app/services/git_push_service.rb
@@ -10,14 +10,16 @@ class GitPushService
   #
   # Next, this method:
   #  1. Creates the push event
-  #  2. Updates merge requests
-  #  3. Recognizes cross-references from commit messages
-  #  4. Executes the project's web hooks
-  #  5. Executes the project's services
+  #  2. Ensures that the project satellite exists
+  #  3. Updates merge requests
+  #  4. Recognizes cross-references from commit messages
+  #  5. Executes the project's web hooks
+  #  6. Executes the project's services
   #
   def execute(project, user, oldrev, newrev, ref)
     @project, @user = project, user
 
+    project.ensure_satellite_exists
     project.repository.expire_cache
 
     if push_remove_branch?(ref, newrev)
diff --git a/app/services/merge_requests/auto_merge_service.rb b/app/services/merge_requests/auto_merge_service.rb
new file mode 100644
index 0000000000000000000000000000000000000000..db824d452d0cecd9494a400aa3ecdb84668271fe
--- /dev/null
+++ b/app/services/merge_requests/auto_merge_service.rb
@@ -0,0 +1,75 @@
+module MergeRequests
+  # AutoMergeService class
+  #
+  # Do git merge in satellite and in case of success
+  # mark merge request as merged and execute all hooks and notifications
+  # Called when you do merge via GitLab UI
+  class AutoMergeService < BaseMergeService
+    attr_reader :merge_request, :commit_message
+
+    def execute(merge_request, commit_message)
+      @commit_message = commit_message
+      @merge_request = merge_request
+
+      merge_request.lock_mr
+
+      if merge!
+        merge_request.merge
+        create_merge_event(merge_request, current_user)
+        create_note(merge_request)
+        notification_service.merge_mr(merge_request, current_user)
+        execute_hooks(merge_request, 'merge')
+        true
+      else
+        merge_request.unlock_mr
+        false
+      end
+    rescue
+      merge_request.unlock_mr if merge_request.locked?
+      merge_request.mark_as_unmergeable
+      false
+    end
+
+    def merge!
+      if merge_request.for_fork?
+        Gitlab::Satellite::MergeAction.new(current_user, merge_request).merge!(commit_message)
+      else
+        # Merge local branches using rugged instead of satellites
+        if sha = commit
+          after_commit(sha, merge_request.target_branch)
+
+          if merge_request.remove_source_branch?
+            DeleteBranchService.new(merge_request.source_project, current_user).execute(merge_request.source_branch)
+          end
+
+          true
+        else
+          false
+        end
+      end
+    end
+
+    def commit
+      committer = repository.user_to_comitter(current_user)
+
+      options = {
+        message: commit_message,
+        author: committer,
+        committer: committer
+      }
+
+      repository.merge(merge_request.source_branch, merge_request.target_branch, options)
+    end
+
+    def after_commit(sha, branch)
+      commit = repository.commit(sha)
+      full_ref = "#{Gitlab::Git::BRANCH_REF_PREFIX}#{branch}"
+      old_sha = commit.parent_id || Gitlab::Git::BLANK_SHA
+      GitPushService.new.execute(project, current_user, old_sha, sha, full_ref)
+    end
+
+    def repository
+      project.repository
+    end
+  end
+end
diff --git a/app/services/merge_requests/base_merge_service.rb b/app/services/merge_requests/base_merge_service.rb
new file mode 100644
index 0000000000000000000000000000000000000000..9579573adf9fb9ff34c1b59f08668b46b11b04b2
--- /dev/null
+++ b/app/services/merge_requests/base_merge_service.rb
@@ -0,0 +1,10 @@
+module MergeRequests
+  class BaseMergeService < MergeRequests::BaseService
+
+    private
+
+    def create_merge_event(merge_request, current_user)
+      EventCreateService.new.merge_mr(merge_request, current_user)
+    end
+  end
+end
diff --git a/app/services/merge_requests/build_service.rb b/app/services/merge_requests/build_service.rb
index a9b29f9654d716553330b62c48860e4da4d7d1bd..956480938c398d27fb08b21d001000fe0467a855 100644
--- a/app/services/merge_requests/build_service.rb
+++ b/app/services/merge_requests/build_service.rb
@@ -12,16 +12,12 @@ module MergeRequests
       merge_request.target_project ||= (project.forked_from_project || project)
       merge_request.target_branch ||= merge_request.target_project.default_branch
 
-      if merge_request.target_branch.blank? || merge_request.source_branch.blank?
-        message =
-          if params[:source_branch] || params[:target_branch]
-            "You must select source and target branch"
-          end
-
-        return build_failed(merge_request, message)
+      unless merge_request.target_branch && merge_request.source_branch
+        return build_failed(merge_request, nil)
       end
 
       compare_result = CompareService.new.execute(
+        current_user,
         merge_request.source_project,
         merge_request.source_branch,
         merge_request.target_project,
@@ -44,6 +40,7 @@ module MergeRequests
           merge_request.compare_diffs = diffs
 
         elsif diffs == false
+          # satellite timeout return false
           merge_request.can_be_created = false
           merge_request.compare_failed = true
         end
@@ -62,6 +59,9 @@ module MergeRequests
       end
 
       merge_request
+
+    rescue Gitlab::Satellite::BranchesWithoutParent
+      return build_failed(merge_request, "Selected branches have no common commit so they cannot be merged.")
     end
 
     def build_failed(merge_request, message)
diff --git a/app/services/merge_requests/merge_service.rb b/app/services/merge_requests/merge_service.rb
index 2107529a21a1a00beb86818399fd62f11d1056c4..327ead4ff3fe1fdb869aa415a48ee54ab9a222a5 100644
--- a/app/services/merge_requests/merge_service.rb
+++ b/app/services/merge_requests/merge_service.rb
@@ -1,57 +1,22 @@
 module MergeRequests
   # MergeService class
   #
-  # Do git merge and in case of success
-  # mark merge request as merged and execute all hooks and notifications
-  # Executed when you do merge via GitLab UI
-  #
-  class MergeService < MergeRequests::BaseService
-    attr_reader :merge_request, :commit_message
-
+  # Mark existing merge request as merged
+  # and execute all hooks and notifications
+  # Called when you do merge via command line and push code
+  # to target branch
+  class MergeService < BaseMergeService
     def execute(merge_request, commit_message)
-      @commit_message = commit_message
-      @merge_request = merge_request
+      merge_request.merge
 
-      unless @merge_request.mergeable?
-        return error('Merge request is not mergeable')
-      end
-
-      merge_request.in_locked_state do
-        if merge_changes
-          after_merge
-          success
-        else
-          error('Can not merge changes')
-        end
-      end
-    end
-
-    private
-
-    def merge_changes
-      if sha = commit
-        after_commit(sha, merge_request.target_branch)
-      end
-    end
-
-    def commit
-      committer = repository.user_to_comitter(current_user)
-
-      options = {
-        message: commit_message,
-        author: committer,
-        committer: committer
-      }
-
-      repository.merge(merge_request.source_sha, merge_request.target_branch, options)
-    end
-
-    def after_commit(sha, branch)
-      PostCommitService.new(project, current_user).execute(sha, branch)
-    end
+      create_merge_event(merge_request, current_user)
+      create_note(merge_request)
+      notification_service.merge_mr(merge_request, current_user)
+      execute_hooks(merge_request, 'merge')
 
-    def after_merge
-      MergeRequests::PostMergeService.new(project, current_user).execute(merge_request)
+      true
+    rescue
+      false
     end
   end
 end
diff --git a/app/services/merge_requests/post_merge_service.rb b/app/services/merge_requests/post_merge_service.rb
deleted file mode 100644
index aceb8cb902199cca00d3113fb2210800b2aa17e5..0000000000000000000000000000000000000000
--- a/app/services/merge_requests/post_merge_service.rb
+++ /dev/null
@@ -1,22 +0,0 @@
-module MergeRequests
-  # PostMergeService class
-  #
-  # Mark existing merge request as merged
-  # and execute all hooks and notifications
-  #
-  class PostMergeService < MergeRequests::BaseService
-    def execute(merge_request)
-      merge_request.mark_as_merged
-      create_merge_event(merge_request, current_user)
-      create_note(merge_request)
-      notification_service.merge_mr(merge_request, current_user)
-      execute_hooks(merge_request, 'merge')
-    end
-
-    private
-
-    def create_merge_event(merge_request, current_user)
-      EventCreateService.new.merge_mr(merge_request, current_user)
-    end
-  end
-end
diff --git a/app/services/merge_requests/refresh_service.rb b/app/services/merge_requests/refresh_service.rb
index e903e48e3cd26daeb577dc4e5ecb3986dd315515..d0648da049b42a2e4882874e872950515a0bee63 100644
--- a/app/services/merge_requests/refresh_service.rb
+++ b/app/services/merge_requests/refresh_service.rb
@@ -33,9 +33,9 @@ module MergeRequests
 
 
       merge_requests.uniq.select(&:source_project).each do |merge_request|
-        MergeRequests::PostMergeService.
+        MergeRequests::MergeService.
           new(merge_request.target_project, @current_user).
-          execute(merge_request)
+          execute(merge_request, nil)
       end
     end
 
diff --git a/app/services/post_commit_service.rb b/app/services/post_commit_service.rb
deleted file mode 100644
index 8592c8d238ba6930eeba1fc1125fbd4a220f3bbb..0000000000000000000000000000000000000000
--- a/app/services/post_commit_service.rb
+++ /dev/null
@@ -1,71 +0,0 @@
-class PostCommitService < BaseService
-  include Gitlab::Popen
-
-  attr_reader :changes, :repo_path
-
-  def execute(sha, branch)
-    commit = repository.commit(sha)
-    full_ref = Gitlab::Git::BRANCH_REF_PREFIX + branch
-    old_sha = commit.parent_id || Gitlab::Git::BLANK_SHA
-    @changes = "#{old_sha} #{sha} #{full_ref}"
-    @repo_path = repository.path_to_repo
-
-    post_receive
-  end
-
-  private
-
-  def post_receive
-    hook = hook_file('post-receive', repo_path)
-    return true if hook.nil?
-    call_receive_hook(hook)
-  end
-
-  def call_receive_hook(hook)
-    # function  will return true if succesful
-    exit_status = false
-
-    vars = {
-      'GL_ID' => Gitlab::ShellEnv.gl_id(current_user),
-      'PWD' => repo_path
-    }
-
-    options = {
-      chdir: repo_path
-    }
-
-    # we combine both stdout and stderr as we don't know what stream
-    # will be used by the custom hook
-    Open3.popen2e(vars, hook, options) do |stdin, stdout_stderr, wait_thr|
-      exit_status = true
-      stdin.sync = true
-
-      # in git, pre- and post- receive hooks may just exit without
-      # reading stdin. We catch the exception to avoid a broken pipe
-      # warning
-      begin
-        # inject all the changes as stdin to the hook
-        changes.lines do |line|
-          stdin.puts line
-        end
-      rescue Errno::EPIPE
-      end
-
-      # need to close stdin before reading stdout
-      stdin.close
-
-      # only output stdut_stderr if scripts doesn't return 0
-      unless wait_thr.value == 0
-        exit_status = false
-      end
-    end
-
-    exit_status
-  end
-
-  def hook_file(hook_type, repo_path)
-    hook_path = File.join(repo_path.strip, 'hooks')
-    hook_file = "#{hook_path}/#{hook_type}"
-    hook_file if File.exist?(hook_file)
-  end
-end
diff --git a/app/services/projects/destroy_service.rb b/app/services/projects/destroy_service.rb
index 28872c89259d4f939d31d071cdab00f5f161e71b..403f419ec508b0043c1086779064d5737649077f 100644
--- a/app/services/projects/destroy_service.rb
+++ b/app/services/projects/destroy_service.rb
@@ -27,6 +27,7 @@ module Projects
         end
       end
 
+      project.satellite.destroy
       log_info("Project \"#{project.name}\" was removed")
       system_hook_service.execute_hooks_for(project, :destroy)
       true
diff --git a/app/services/projects/transfer_service.rb b/app/services/projects/transfer_service.rb
index 550ed6897dd4c7afb857a747aae1b28b2f12def5..f43c0ef70e9183e06275b35fab6f5cfc5082dfbc 100644
--- a/app/services/projects/transfer_service.rb
+++ b/app/services/projects/transfer_service.rb
@@ -33,6 +33,9 @@ module Projects
           raise TransferError.new("Project with same path in target namespace already exists")
         end
 
+        # Remove old satellite
+        project.satellite.destroy
+
         # Apply new namespace id
         project.namespace = new_namespace
         project.save!
@@ -48,6 +51,9 @@ module Projects
         # Move wiki repo also if present
         gitlab_shell.mv_repository("#{old_path}.wiki", "#{new_path}.wiki")
 
+        # Create a new satellite (reload project from DB)
+        Project.find(project.id).ensure_satellite_exists
+
         # clear project cached events
         project.reset_events_cache
 
diff --git a/app/views/projects/merge_requests/_new_compare.html.haml b/app/views/projects/merge_requests/_new_compare.html.haml
index 7709330611a835944fdf89c5e2213edfacfaa96e..ff9c0cdb283c6953922e01c99a4fbe36c4cc674d 100644
--- a/app/views/projects/merge_requests/_new_compare.html.haml
+++ b/app/views/projects/merge_requests/_new_compare.html.haml
@@ -35,7 +35,7 @@
     - if @merge_request.compare_failed
       .alert.alert-danger
         %h4 Compare failed
-        %p We can't compare selected branches. It may be because of huge diff. Please try again or select different branches.
+        %p We can't compare selected branches. It may be because of huge diff or satellite timeout. Please try again or select different branches.
     - else
       .light-well
         .center
diff --git a/app/views/projects/merge_requests/_new_submit.html.haml b/app/views/projects/merge_requests/_new_submit.html.haml
index 76f44211dac3f7fb821600003afb37f0ec892120..633a54f3620cc132e8e932a40bc8b8d8cc7c3802 100644
--- a/app/views/projects/merge_requests/_new_submit.html.haml
+++ b/app/views/projects/merge_requests/_new_submit.html.haml
@@ -24,7 +24,7 @@
         = icon('history')
         Commits
         %span.badge= @commits.size
-    %li.diffs-tab.active
+    %li.diffs-tab
       = link_to url_for(params), data: {target: '#diffs', action: 'diffs', toggle: 'tab'} do
         = icon('list-alt')
         Changes
@@ -33,7 +33,7 @@
   .tab-content
     #commits.commits.tab-pane
       = render "projects/commits/commits", project: @project
-    #diffs.diffs.tab-pane.active
+    #diffs.diffs.tab-pane
       - if @diffs.present?
         = render "projects/diffs/diffs", diffs: @diffs, project: @project
       - elsif @commits.size > MergeRequestDiff::COMMITS_SAFE_SIZE
diff --git a/app/views/projects/merge_requests/merge.js.haml b/app/views/projects/merge_requests/automerge.js.haml
similarity index 100%
rename from app/views/projects/merge_requests/merge.js.haml
rename to app/views/projects/merge_requests/automerge.js.haml
diff --git a/app/views/projects/merge_requests/widget/_open.html.haml b/app/views/projects/merge_requests/widget/_open.html.haml
index f420cdcab49cfc568618bbc93110e0bcca52a955..bb794912f8f16b9a8cb8bc3dfe67c36177b91706 100644
--- a/app/views/projects/merge_requests/widget/_open.html.haml
+++ b/app/views/projects/merge_requests/widget/_open.html.haml
@@ -3,6 +3,8 @@
   .mr-widget-body
     - if @project.archived?
       = render 'projects/merge_requests/widget/open/archived'
+    - elsif !@project.satellite.exists?
+      = render 'projects/merge_requests/widget/open/no_satellite'
     - elsif @merge_request.commits.blank?
       = render 'projects/merge_requests/widget/open/nothing'
     - elsif @merge_request.branch_missing?
diff --git a/app/views/projects/merge_requests/widget/_show.html.haml b/app/views/projects/merge_requests/widget/_show.html.haml
index a489d4f9b24ee4e675a9ce4e3299408e0816c20f..263cab7a9e8866b45fde34d824d80bbbef0109a9 100644
--- a/app/views/projects/merge_requests/widget/_show.html.haml
+++ b/app/views/projects/merge_requests/widget/_show.html.haml
@@ -11,10 +11,10 @@
   var merge_request_widget;
 
   merge_request_widget = new MergeRequestWidget({
-    url_to_automerge_check: "#{merge_check_namespace_project_merge_request_path(@project.namespace, @project, @merge_request)}",
+    url_to_automerge_check: "#{automerge_check_namespace_project_merge_request_path(@project.namespace, @project, @merge_request)}",
     check_enable: #{@merge_request.unchecked? ? "true" : "false"},
     url_to_ci_check: "#{ci_status_namespace_project_merge_request_path(@project.namespace, @project, @merge_request)}",
     ci_enable: #{@project.ci_service ? "true" : "false"},
-    current_status: "#{@merge_request.gitlab_merge_status}",
+    current_status: "#{@merge_request.automerge_status}",
   });
 
diff --git a/app/views/projects/merge_requests/widget/open/_accept.html.haml b/app/views/projects/merge_requests/widget/open/_accept.html.haml
index 3c0cd25ba07f769eb1e014450f5a3d4616868991..f5bacaf280a6c9af3d171e073e0a0c819e58a8a7 100644
--- a/app/views/projects/merge_requests/widget/open/_accept.html.haml
+++ b/app/views/projects/merge_requests/widget/open/_accept.html.haml
@@ -1,4 +1,4 @@
-= form_for [:merge, @project.namespace.becomes(Namespace), @project, @merge_request], remote: true, method: :post, html: { class: 'accept-mr-form js-requires-input' } do |f|
+= form_for [:automerge, @project.namespace.becomes(Namespace), @project, @merge_request], remote: true, method: :post, html: { class: 'accept-mr-form js-requires-input' } do |f|
   = hidden_field_tag :authenticity_token, form_authenticity_token
   .accept-merge-holder.clearfix.js-toggle-container
     .accept-action
diff --git a/app/views/projects/merge_requests/widget/open/_no_satellite.html.haml b/app/views/projects/merge_requests/widget/open/_no_satellite.html.haml
new file mode 100644
index 0000000000000000000000000000000000000000..3718cfd83339b4be6e5d6200f58696e46bce4acd
--- /dev/null
+++ b/app/views/projects/merge_requests/widget/open/_no_satellite.html.haml
@@ -0,0 +1,3 @@
+%p
+  %span
+    %strong This repository does not have a satellite. Please ask an administrator to fix this issue!
diff --git a/app/workers/auto_merge_worker.rb b/app/workers/auto_merge_worker.rb
new file mode 100644
index 0000000000000000000000000000000000000000..a6dd73eee5f81c8cff509d63b2294c0b05ae26a0
--- /dev/null
+++ b/app/workers/auto_merge_worker.rb
@@ -0,0 +1,13 @@
+class AutoMergeWorker
+  include Sidekiq::Worker
+
+  sidekiq_options queue: :default
+
+  def perform(merge_request_id, current_user_id, params)
+    params = params.with_indifferent_access
+    current_user = User.find(current_user_id)
+    merge_request = MergeRequest.find(merge_request_id)
+    merge_request.should_remove_source_branch = params[:should_remove_source_branch]
+    merge_request.automerge!(current_user, params[:commit_message])
+  end
+end
diff --git a/app/workers/merge_worker.rb b/app/workers/merge_worker.rb
deleted file mode 100644
index 6a8665c179ab89057561511623dae4949e890c75..0000000000000000000000000000000000000000
--- a/app/workers/merge_worker.rb
+++ /dev/null
@@ -1,19 +0,0 @@
-class MergeWorker
-  include Sidekiq::Worker
-
-  sidekiq_options queue: :default
-
-  def perform(merge_request_id, current_user_id, params)
-    params = params.with_indifferent_access
-    current_user = User.find(current_user_id)
-    merge_request = MergeRequest.find(merge_request_id)
-
-    result = MergeRequests::MergeService.new(merge_request.target_project, current_user).
-      execute(merge_request, params[:commit_message])
-
-    if result[:status] == :success && params[:should_remove_source_branch].present?
-      DeleteBranchService.new(merge_request.source_project, current_user).
-        execute(merge_request.source_branch)
-    end
-  end
-end
diff --git a/app/workers/repository_import_worker.rb b/app/workers/repository_import_worker.rb
index b546f8777e158405b5459338f0944ab2b677e42f..94832872d13ddccb192eaf05ac1d29f269b1bd57 100644
--- a/app/workers/repository_import_worker.rb
+++ b/app/workers/repository_import_worker.rb
@@ -27,6 +27,7 @@ class RepositoryImportWorker
 
     project.import_finish
     project.save
+    project.satellite.create unless project.satellite.exists?
     ProjectCacheWorker.perform_async(project.id)
     Gitlab::BitbucketImport::KeyDeleter.new(project).execute if project.import_type == 'bitbucket'
   end
diff --git a/config/routes.rb b/config/routes.rb
index d7307a61ede75414c336cdff3e778c8e4cbcb912..1166a4b3ebae33ad7221051987189b494f724b68 100644
--- a/config/routes.rb
+++ b/config/routes.rb
@@ -463,8 +463,8 @@ Gitlab::Application.routes.draw do
           member do
             get :diffs
             get :commits
-            post :merge
-            get :merge_check
+            post :automerge
+            get :automerge_check
             get :ci_status
             post :toggle_subscription
           end
diff --git a/doc/development/architecture.md b/doc/development/architecture.md
index c00d290371e032e45beea68e51236ea00f54db55..541af487bb1fc71f34367ce0258408d77f790b62 100644
--- a/doc/development/architecture.md
+++ b/doc/development/architecture.md
@@ -56,9 +56,9 @@ To serve repositories over SSH there's an add-on application called gitlab-shell
 
 A typical install of GitLab will be on GNU/Linux. It uses Nginx or Apache as a web front end to proxypass the Unicorn web server. By default, communication between Unicorn and the front end is via a Unix domain socket but forwarding requests via TCP is also supported. The web front end accesses `/home/git/gitlab/public` bypassing the Unicorn server to serve static pages, uploads (e.g. avatar images or attachments), and precompiled assets. GitLab serves web pages and a [GitLab API](https://gitlab.com/gitlab-org/gitlab-ce/tree/master/doc/api) using the Unicorn web server. It uses Sidekiq as a job queue which, in turn, uses redis as a non-persistent database backend for job information, meta data, and incoming jobs.
 
-The GitLab web app uses MySQL or PostgreSQL for persistent database information (e.g. users, permissions, issues, other meta data). GitLab stores the bare git repositories it serves in `/home/git/repositories` by default. It also keeps default branch and hook information with the bare repository.
+The GitLab web app uses MySQL or PostgreSQL for persistent database information (e.g. users, permissions, issues, other meta data). GitLab stores the bare git repositories it serves in `/home/git/repositories` by default. It also keeps default branch and hook information with the bare repository. `/home/git/gitlab-satellites` keeps checked out repositories when performing actions such as a merge request, editing files in the web interface, etc.
 
-When serving repositories over HTTP/HTTPS GitLab utilizes the GitLab API to resolve authorization and access as well as serving git objects.
+The satellite repository is used by the web interface for editing repositories and the wiki which is also a git repository. When serving repositories over HTTP/HTTPS GitLab utilizes the GitLab API to resolve authorization and access as well as serving git objects.
 
 The add-on component gitlab-shell serves repositories over SSH. It manages the SSH keys within `/home/git/.ssh/authorized_keys` which should not be manually edited. gitlab-shell accesses the bare repositories directly to serve git objects and communicates with redis to submit jobs to Sidekiq for GitLab to process. gitlab-shell queries the GitLab API to determine authorization and access.
 
@@ -129,7 +129,7 @@ Note: `/home/git/` is shorthand for `/home/git`.
 
 gitlabhq (includes Unicorn and Sidekiq logs)
 
-- `/home/git/gitlab/log/` contains `application.log`, `production.log`, `sidekiq.log`, `unicorn.stdout.log`, `githost.log` and `unicorn.stderr.log` normally.
+- `/home/git/gitlab/log/` contains `application.log`, `production.log`, `sidekiq.log`, `unicorn.stdout.log`, `githost.log`, `satellites.log`, and `unicorn.stderr.log` normally.
 
 gitlab-shell
 
diff --git a/doc/install/installation.md b/doc/install/installation.md
index 55b6f216dde7bb42f42647d2765224545fc4c3c1..6e2bb4191ca42060a10705f0a14de4fce0040dd8 100644
--- a/doc/install/installation.md
+++ b/doc/install/installation.md
@@ -216,6 +216,10 @@ We recommend using a PostgreSQL database. For MySQL check [MySQL setup guide](da
     sudo chmod -R u+rwX,go-w log/
     sudo chmod -R u+rwX tmp/
 
+    # Create directory for satellites
+    sudo -u git -H mkdir /home/git/gitlab-satellites
+    sudo chmod u+rwx,g=rx,o-rwx /home/git/gitlab-satellites
+
     # Make sure GitLab can write to the tmp/pids/ and tmp/sockets/ directories
     sudo chmod -R u+rwX tmp/pids/
     sudo chmod -R u+rwX tmp/sockets/
diff --git a/doc/install/requirements.md b/doc/install/requirements.md
index e44ce25b6b40152cd772bd2096b2e57bf9a69c4e..605977097b4e5738f1358a1c325fd76e2db34184 100644
--- a/doc/install/requirements.md
+++ b/doc/install/requirements.md
@@ -40,7 +40,7 @@ We love [JRuby](http://jruby.org/) and [Rubinius](http://rubini.us/) but GitLab
 
 ### Storage
 
-The necessary hard drive space largely depends on the size of the repos you want to store in GitLab but as a *rule of thumb* you should have at least as much free space as all your repos combined take up. 
+The necessary hard drive space largely depends on the size of the repos you want to store in GitLab but as a *rule of thumb* you should have at least twice as much free space as all your repos combined take up. You need twice the storage because [GitLab satellites](structure.md) contain an extra copy of each repo.
 
 If you want to be flexible about growing your hard drive space in the future consider mounting it using LVM so you can add more hard drives when you need them.
 
diff --git a/doc/install/structure.md b/doc/install/structure.md
index d58b0040eefb80f92f7214f751734f27a467eb0d..5c03f073c18c57094dc1d35d82f06eb318e4ebf1 100644
--- a/doc/install/structure.md
+++ b/doc/install/structure.md
@@ -6,14 +6,16 @@ This is the directory structure you will end up with following the instructions
     |   |-- git
     |       |-- .ssh
     |       |-- gitlab
+    |       |-- gitlab-satellites
     |       |-- gitlab-shell
     |       |-- repositories
 
 * `/home/git/.ssh` - contains openssh settings.  Specifically the `authorized_keys` file managed by gitlab-shell.
 * `/home/git/gitlab` - GitLab core software.
+* `/home/git/gitlab-satellites` - checked out repositories for merge requests and file editing from web UI.  This can be treated as a temporary files directory.
 * `/home/git/gitlab-shell` - Core add-on component of GitLab.  Maintains SSH cloning and other functionality.
 * `/home/git/repositories` - bare repositories for all projects organized by namespace.  This is where the git repositories which are pushed/pulled are maintained for all projects.  **This area is critical data for projects.  [Keep a backup](../raketasks/backup_restore.md)**
 
-*Note: the default locations for repositories can be configured in `config/gitlab.yml` of GitLab and `config.yml` of gitlab-shell.*
+*Note: the default locations for gitlab-satellites and repositories can be configured in `config/gitlab.yml` of GitLab and `config.yml` of gitlab-shell.*
 
 To see a more in-depth overview see the [GitLab architecture doc](../development/architecture.md).
diff --git a/doc/logs/logs.md b/doc/logs/logs.md
index 27937e517644922d36930c923e1bd90f91c58e83..83c32b09253faea15241721afd0d40b925e56d31 100644
--- a/doc/logs/logs.md
+++ b/doc/logs/logs.md
@@ -51,6 +51,16 @@ December 03, 2014 13:20 -> ERROR -> Command failed [1]: /usr/bin/git --git-dir=/
 error: failed to push some refs to '/Users/vsizov/gitlab-development-kit/repositories/gitlabhq/gitlab_git.git'
 ```
 
+#### satellites.log
+This file lives in `/var/log/gitlab/gitlab-rails/satellites.log` for omnibus package or in `/home/git/gitlab/log/satellites.log` for installations from the source.
+
+In some cases GitLab should perform write actions to git repository, for example when it is needed to merge the merge request or edit a file with online editor. If something went wrong you can look into this file to find out what exactly happened.
+```
+October 07, 2014 11:36: Failed to create satellite for Chesley Weimann III / project1817
+October 07, 2014 11:36: PID: 1872: git clone /Users/vsizov/gitlab-development-kit/gitlab/tmp/tests/repositories/conrad6841/gitlabhq.git /Users/vsizov/gitlab-development-kit/gitlab/tmp/tests/gitlab-satellites/conrad6841/gitlabhq
+October 07, 2014 11:36: PID: 1872: -> fatal: repository '/Users/vsizov/gitlab-development-kit/gitlab/tmp/tests/repositories/conrad6841/gitlabhq.git' does not exist
+```
+
 #### sidekiq.log
 This file lives in `/var/log/gitlab/gitlab-rails/sidekiq.log` for omnibus package or in `/home/git/gitlab/log/sidekiq.log` for installations from the source.
 
@@ -89,4 +99,4 @@ W, [2015-02-13T07:16:01.313000 #9094]  WARN -- : Unicorn::WorkerKiller send SIGQ
 I, [2015-02-13T07:16:01.530733 #9047]  INFO -- : reaped #<Process::Status: pid 9094 exit 0> worker=1
 I, [2015-02-13T07:16:01.534501 #13379]  INFO -- : worker=1 spawned pid=13379
 I, [2015-02-13T07:16:01.534848 #13379]  INFO -- : worker=1 ready
-```
+```
\ No newline at end of file
diff --git a/doc/raketasks/maintenance.md b/doc/raketasks/maintenance.md
index d9dce2af480ca40ab9d3c1f6b5a8e89087e94acf..69171cd17654f83b6a98d5abcfdc5f373fdf9da8 100644
--- a/doc/raketasks/maintenance.md
+++ b/doc/raketasks/maintenance.md
@@ -105,11 +105,24 @@ Log directory writable? ... yes
 Tmp directory writable? ... yes
 Init script exists? ... yes
 Init script up-to-date? ... yes
+Projects have satellites? ... yes
 Redis version >= 2.0.0? ... yes
 
 Checking GitLab ... Finished
 ```
 
+## (Re-)Create satellite repositories
+
+This will create satellite repositories for all your projects.
+
+If necessary, remove the `repo_satellites` directory and rerun the commands below.
+
+```
+sudo -u git -H mkdir -p /home/git/gitlab-satellites
+sudo -u git -H bundle exec rake gitlab:satellites:create RAILS_ENV=production
+sudo chmod u+rwx,g=rx,o-rwx /home/git/gitlab-satellites
+```
+
 ## Rebuild authorized_keys file
 
 In some case it is necessary to rebuild the `authorized_keys` file.
diff --git a/features/steps/dashboard/help.rb b/features/steps/dashboard/help.rb
index 800e869533e927f12fb2bd99e1db30535e69f30e..86ab31a58aba4eb45aa51cffdc2b328c3e3a2ecf 100644
--- a/features/steps/dashboard/help.rb
+++ b/features/steps/dashboard/help.rb
@@ -16,6 +16,6 @@ class Spinach::Features::DashboardHelp < Spinach::FeatureSteps
   end
 
   step 'Header "Rebuild project satellites" should have correct ids and links' do
-    header_should_have_correct_id_and_link(2, 'Check GitLab configuration', 'check-gitlab-configuration', '.documentation')
+    header_should_have_correct_id_and_link(2, '(Re-)Create satellite repositories', 're-create-satellite-repositories', '.documentation')
   end
 end
diff --git a/features/steps/dashboard/merge_requests.rb b/features/steps/dashboard/merge_requests.rb
index 28c8c6b6015147ca49946968163ea9d6dcda01c5..cec8d06adee62b66a48bc7eb7803e8a0799c25e9 100644
--- a/features/steps/dashboard/merge_requests.rb
+++ b/features/steps/dashboard/merge_requests.rb
@@ -66,7 +66,7 @@ class Spinach::Features::DashboardMergeRequests < Spinach::FeatureSteps
 
   def authored_merge_request
     @authored_merge_request ||= create :merge_request,
-                                  source_branch: 'markdown',
+                                  source_branch: 'simple_merge_request',
                                   author: current_user,
                                   target_project: project,
                                   source_project: project
@@ -74,14 +74,14 @@ class Spinach::Features::DashboardMergeRequests < Spinach::FeatureSteps
 
   def other_merge_request
     @other_merge_request ||= create :merge_request,
-                              source_branch: 'fix',
+                              source_branch: '2_3_notes_fix',
                               target_project: project,
                               source_project: project
   end
 
   def authored_merge_request_from_fork
     @authored_merge_request_from_fork ||= create :merge_request,
-                                            source_branch: 'feature_conflict',
+                                            source_branch: 'basic_page',
                                             author: current_user,
                                             target_project: public_project,
                                             source_project: forked_project
@@ -89,7 +89,7 @@ class Spinach::Features::DashboardMergeRequests < Spinach::FeatureSteps
 
   def assigned_merge_request_from_fork
     @assigned_merge_request_from_fork ||= create :merge_request,
-                                            source_branch: 'markdown',
+                                            source_branch: 'basic_page_fix',
                                             assignee: current_user,
                                             target_project: public_project,
                                             source_project: forked_project
diff --git a/features/steps/project/forked_merge_requests.rb b/features/steps/project/forked_merge_requests.rb
index 2a333222fb29b024a6e0e7b3ad164d8a04f5ca1a..3e97e84d116164b55ddec7002c6233703f1cd1f6 100644
--- a/features/steps/project/forked_merge_requests.rb
+++ b/features/steps/project/forked_merge_requests.rb
@@ -9,6 +9,7 @@ class Spinach::Features::ProjectForkedMergeRequests < Spinach::FeatureSteps
     @project = Project.find_by(name: "Shop")
     @project ||= create(:project, name: "Shop")
     @project.team << [@user, :reporter]
+    @project.ensure_satellite_exists
   end
 
   step 'I have a project forked off of "Shop" called "Forked Shop"' do
diff --git a/features/steps/project/merge_requests.rb b/features/steps/project/merge_requests.rb
index f2198f58c137385288dac11526b71c5f9b59e5d3..a1a26abd8ca7b25d8b6069ab46306a1a3bc601cb 100644
--- a/features/steps/project/merge_requests.rb
+++ b/features/steps/project/merge_requests.rb
@@ -198,10 +198,15 @@ class Spinach::Features::ProjectMergeRequests < Spinach::FeatureSteps
   end
 
   step 'merge request "Bug NS-05" is mergeable' do
+    merge_request.project.satellite.create
     merge_request.mark_as_mergeable
   end
 
   step 'I accept this merge request' do
+    Gitlab::Satellite::MergeAction.any_instance.stub(
+      merge!: true,
+    )
+
     page.within '.mr-state-widget' do
       click_button "Accept Merge Request"
     end
diff --git a/lib/api/merge_requests.rb b/lib/api/merge_requests.rb
index 7412274b0454f89d11dca509ed167fc3e1e6f1d3..ce21c699e8fc0259b7bfb2627414d7cdecc77ca1 100644
--- a/lib/api/merge_requests.rb
+++ b/lib/api/merge_requests.rb
@@ -198,11 +198,7 @@ module API
 
           if merge_request.open? && !merge_request.work_in_progress?
             if merge_request.can_be_merged?
-              commit_message = params[:merge_commit_message] || merge_request.merge_commit_message
-
-              ::MergeRequests::MergeService.new(merge_request.target_project, current_user).
-                execute(merge_request, commit_message)
-
+              merge_request.automerge!(current_user, params[:merge_commit_message] || merge_request.merge_commit_message)
               present merge_request, with: Entities::MergeRequest
             else
               render_api_error!('Branch cannot be merged', 405)
diff --git a/lib/gitlab.rb b/lib/gitlab.rb
index 6108697bc2012e22d96896194df7c7cadbc5b125..5fc1862c3e931f3ec7ab8907c0ce25f192c67a52 100644
--- a/lib/gitlab.rb
+++ b/lib/gitlab.rb
@@ -1,4 +1,5 @@
 require 'gitlab/git'
 
 module Gitlab
+  autoload :Satellite, 'gitlab/satellite/satellite'
 end
diff --git a/lib/gitlab/backend/shell.rb b/lib/gitlab/backend/shell.rb
index 14ee4701e7bb9faa44e664c9c36124a91efd4305..172d4902add336e73894828004322d14a06969ab 100644
--- a/lib/gitlab/backend/shell.rb
+++ b/lib/gitlab/backend/shell.rb
@@ -217,6 +217,20 @@ module Gitlab
       FileUtils.mv(full_path(old_name), full_path(new_name))
     end
 
+    # Remove GitLab Satellites for provided path (namespace or repo dir)
+    #
+    # Ex.
+    #   rm_satellites("gitlab")
+    #
+    #   rm_satellites("gitlab/gitlab-ci.git")
+    #
+    def rm_satellites(path)
+      raise ArgumentError.new("Path can't be blank") if path.blank?
+
+      satellites_path = File.join(Gitlab.config.satellites.path, path)
+      FileUtils.rm_r(satellites_path, force: true)
+    end
+
     def url_to_repo(path)
       Gitlab.config.gitlab_shell.ssh_path_prefix + "#{path}.git"
     end
diff --git a/lib/gitlab/satellite/action.rb b/lib/gitlab/satellite/action.rb
new file mode 100644
index 0000000000000000000000000000000000000000..489070f1a3f4dcecc2fde5e530ec2230b2e1e420
--- /dev/null
+++ b/lib/gitlab/satellite/action.rb
@@ -0,0 +1,58 @@
+module Gitlab
+  module Satellite
+    class Action
+      DEFAULT_OPTIONS = { git_timeout: Gitlab.config.satellites.timeout.seconds }
+
+      attr_accessor :options, :project, :user
+
+      def initialize(user, project, options = {})
+        @options = DEFAULT_OPTIONS.merge(options)
+        @project = project
+        @user = user
+      end
+
+      protected
+
+      # * Sets a 30s timeout for Git
+      # * Locks the satellite repo
+      # * Yields the prepared satellite repo
+      def in_locked_and_timed_satellite
+        Gitlab::ShellEnv.set_env(user)
+
+        Grit::Git.with_timeout(options[:git_timeout]) do
+          project.satellite.lock do
+            return yield project.satellite.repo
+          end
+        end
+      rescue Errno::ENOMEM => ex
+        return handle_exception(ex)
+      rescue Grit::Git::GitTimeout => ex
+        return handle_exception(ex)
+      ensure
+        Gitlab::ShellEnv.reset_env
+      end
+
+      # * Recreates the satellite
+      # * Sets up Git variables for the user
+      #
+      # Note: use this within #in_locked_and_timed_satellite
+      def prepare_satellite!(repo)
+        project.satellite.clear_and_update!
+
+        if user
+          repo.config['user.name'] = user.name
+          repo.config['user.email'] = user.email
+        end
+      end
+
+      def default_options(options = {})
+        { raise: true, timeout: true }.merge(options)
+      end
+
+      def handle_exception(exception)
+        Gitlab::GitLogger.error(exception.message)
+        false
+      end
+    end
+  end
+end
diff --git a/lib/gitlab/satellite/compare_action.rb b/lib/gitlab/satellite/compare_action.rb
new file mode 100644
index 0000000000000000000000000000000000000000..46c98a8f4cab479a6bfa2f5ee6483864403fd807
--- /dev/null
+++ b/lib/gitlab/satellite/compare_action.rb
@@ -0,0 +1,44 @@
+module Gitlab
+  module Satellite
+    class BranchesWithoutParent < StandardError; end
+
+    class CompareAction < Action
+      def initialize(user, target_project, target_branch, source_project, source_branch)
+        super user, target_project
+
+        @target_project, @target_branch = target_project, target_branch
+        @source_project, @source_branch = source_project, source_branch
+      end
+
+      # Compare 2 repositories and return Gitlab::CompareResult object
+      def result
+        in_locked_and_timed_satellite do |target_repo|
+          prepare_satellite!(target_repo)
+          update_satellite_source_and_target!(target_repo)
+
+          Gitlab::CompareResult.new(compare(target_repo))
+        end
+      rescue Grit::Git::CommandFailed => ex
+        raise BranchesWithoutParent
+      end
+
+      private
+
+      # Assumes a satellite exists that is a fresh clone of the projects repo, prepares satellite for diffs
+      def update_satellite_source_and_target!(target_repo)
+        target_repo.remote_add('source', @source_project.repository.path_to_repo)
+        target_repo.remote_fetch('source')
+      rescue Grit::Git::CommandFailed => ex
+        handle_exception(ex)
+      end
+
+      def compare(repo)
+        @compare ||= Gitlab::Git::Compare.new(
+          Gitlab::Git::Repository.new(repo.path),
+          "origin/#{@target_branch}",
+          "source/#{@source_branch}"
+        )
+      end
+    end
+  end
+end
diff --git a/lib/gitlab/satellite/logger.rb b/lib/gitlab/satellite/logger.rb
new file mode 100644
index 0000000000000000000000000000000000000000..6f3f8255aca11e5b9c77bf98bd968a299e3c9756
--- /dev/null
+++ b/lib/gitlab/satellite/logger.rb
@@ -0,0 +1,13 @@
+module Gitlab
+  module Satellite
+    class Logger < Gitlab::Logger
+      def self.file_name
+        'satellites.log'
+      end
+
+      def format_message(severity, timestamp, progname, msg)
+        "#{timestamp.to_s(:long)}: #{msg}\n"
+      end
+    end
+  end
+end
diff --git a/lib/gitlab/satellite/merge_action.rb b/lib/gitlab/satellite/merge_action.rb
new file mode 100644
index 0000000000000000000000000000000000000000..f9bf286697ed436096a07158e7c71d625157775b
--- /dev/null
+++ b/lib/gitlab/satellite/merge_action.rb
@@ -0,0 +1,146 @@
+module Gitlab
+  module Satellite
+    # GitLab server-side merge
+    class MergeAction < Action
+      attr_accessor :merge_request
+
+      def initialize(user, merge_request)
+        super user, merge_request.target_project
+        @merge_request = merge_request
+      end
+
+      # Checks if a merge request can be executed without user interaction
+      def can_be_merged?
+        in_locked_and_timed_satellite do |merge_repo|
+          prepare_satellite!(merge_repo)
+          merge_in_satellite!(merge_repo)
+        end
+      end
+
+      # Merges the source branch into the target branch in the satellite and
+      # pushes it back to the repository.
+      # It also removes the source branch if requested in the merge request (and this is permitted by the merge request).
+      #
+      # Returns false if the merge produced conflicts
+      # Returns false if pushing from the satellite to the repository failed or was rejected
+      # Returns true otherwise
+      def merge!(merge_commit_message = nil)
+        in_locked_and_timed_satellite do |merge_repo|
+          prepare_satellite!(merge_repo)
+          if merge_in_satellite!(merge_repo, merge_commit_message)
+            # push merge back to bare repo
+            # will raise CommandFailed when push fails
+            merge_repo.git.push(default_options, :origin, merge_request.target_branch)
+
+            # remove source branch
+            if merge_request.remove_source_branch?
+              # will raise CommandFailed when push fails
+              merge_repo.git.push(default_options, :origin, ":#{merge_request.source_branch}")
+            end
+            # merge, push and branch removal successful
+            true
+          end
+        end
+      rescue Grit::Git::CommandFailed => ex
+        handle_exception(ex)
+      end
+
+      def diff_in_satellite
+        in_locked_and_timed_satellite do |merge_repo|
+          prepare_satellite!(merge_repo)
+          update_satellite_source_and_target!(merge_repo)
+
+          # Only show what is new in the source branch compared to the target branch, not the other way around.
+          # The line below with merge_base is equivalent to diff with three dots (git diff branch1...branch2)
+          # From the git documentation: "git diff A...B" is equivalent to "git diff $(git-merge-base A B) B"
+          common_commit = merge_repo.git.native(:merge_base, default_options, ["origin/#{merge_request.target_branch}", "source/#{merge_request.source_branch}"]).strip
+          merge_repo.git.native(:diff, default_options, common_commit, "source/#{merge_request.source_branch}")
+        end
+      rescue Grit::Git::CommandFailed => ex
+        handle_exception(ex)
+      end
+
+      def diffs_between_satellite
+        in_locked_and_timed_satellite do |merge_repo|
+          prepare_satellite!(merge_repo)
+          update_satellite_source_and_target!(merge_repo)
+          if merge_request.for_fork?
+            repository = Gitlab::Git::Repository.new(merge_repo.path)
+            diffs = Gitlab::Git::Diff.between(
+              repository,
+              "source/#{merge_request.source_branch}",
+              "origin/#{merge_request.target_branch}"
+            )
+          else
+            raise "Attempt to determine diffs between for a non forked merge request in satellite MergeRequest.id:[#{merge_request.id}]"
+          end
+
+          return diffs
+        end
+      rescue Grit::Git::CommandFailed => ex
+        handle_exception(ex)
+      end
+
+      # Get commit as an email patch
+      def format_patch
+        in_locked_and_timed_satellite do |merge_repo|
+          prepare_satellite!(merge_repo)
+          update_satellite_source_and_target!(merge_repo)
+          patch = merge_repo.git.format_patch(default_options({ stdout: true }), "origin/#{merge_request.target_branch}..source/#{merge_request.source_branch}")
+        end
+      rescue Grit::Git::CommandFailed => ex
+        handle_exception(ex)
+      end
+
+      # Retrieve an array of commits between the source and the target
+      def commits_between
+        in_locked_and_timed_satellite do |merge_repo|
+          prepare_satellite!(merge_repo)
+          update_satellite_source_and_target!(merge_repo)
+          if merge_request.for_fork?
+            repository = Gitlab::Git::Repository.new(merge_repo.path)
+            commits = Gitlab::Git::Commit.between(
+              repository,
+              "origin/#{merge_request.target_branch}",
+              "source/#{merge_request.source_branch}"
+            )
+          else
+            raise "Attempt to determine commits between for a non forked merge request in satellite MergeRequest.id:[#{merge_request.id}]"
+          end
+
+          return commits
+        end
+      rescue Grit::Git::CommandFailed => ex
+        handle_exception(ex)
+      end
+
+      private
+      # Merges the source_branch into the target_branch in the satellite.
+      #
+      # Note: it will clear out the satellite before doing anything
+      #
+      # Returns false if the merge produced conflicts
+      # Returns true otherwise
+      def merge_in_satellite!(repo, message = nil)
+        update_satellite_source_and_target!(repo)
+
+        message ||= "Merge branch '#{merge_request.source_branch}' into '#{merge_request.target_branch}'"
+
+        # merge the source branch into the satellite
+        # will raise CommandFailed when merge fails
+        repo.git.merge(default_options({ no_ff: true }), "-m#{message}", "source/#{merge_request.source_branch}")
+      rescue Grit::Git::CommandFailed => ex
+        handle_exception(ex)
+      end
+
+      # Assumes a satellite exists that is a fresh clone of the projects repo, prepares satellite for merges, diffs etc
+      def update_satellite_source_and_target!(repo)
+        repo.remote_add('source', merge_request.source_project.repository.path_to_repo)
+        repo.remote_fetch('source')
+        repo.git.checkout(default_options({ b: true }), merge_request.target_branch, "origin/#{merge_request.target_branch}")
+      rescue Grit::Git::CommandFailed => ex
+        handle_exception(ex)
+      end
+    end
+  end
+end
diff --git a/lib/gitlab/satellite/satellite.rb b/lib/gitlab/satellite/satellite.rb
new file mode 100644
index 0000000000000000000000000000000000000000..398643d68de2c07a56ba30181786f693dae6219a
--- /dev/null
+++ b/lib/gitlab/satellite/satellite.rb
@@ -0,0 +1,148 @@
+module Gitlab
+  module Satellite
+    autoload :DeleteFileAction, 'gitlab/satellite/files/delete_file_action'
+    autoload :EditFileAction,   'gitlab/satellite/files/edit_file_action'
+    autoload :FileAction,       'gitlab/satellite/files/file_action'
+    autoload :NewFileAction,    'gitlab/satellite/files/new_file_action'
+
+    class CheckoutFailed < StandardError; end
+    class CommitFailed < StandardError; end
+    class PushFailed < StandardError; end
+
+    class Satellite
+      include Gitlab::Popen
+
+      PARKING_BRANCH = "__parking_branch"
+
+      attr_accessor :project
+
+      def initialize(project)
+        @project = project
+      end
+
+      def log(message)
+        Gitlab::Satellite::Logger.error(message)
+      end
+
+      def clear_and_update!
+        project.ensure_satellite_exists
+
+        @repo = nil
+        clear_working_dir!
+        delete_heads!
+        remove_remotes!
+        update_from_source!
+      end
+
+      def create
+        output, status = popen(%W(git clone -- #{project.repository.path_to_repo} #{path}),
+                               Gitlab.config.satellites.path)
+
+        log("PID: #{project.id}: git clone #{project.repository.path_to_repo} #{path}")
+        log("PID: #{project.id}: -> #{output}")
+
+        if status.zero?
+          true
+        else
+          log("Failed to create satellite for #{project.name_with_namespace}")
+          false
+        end
+      end
+
+      def exists?
+        File.exists? path
+      end
+
+      # * Locks the satellite
+      # * Changes the current directory to the satellite's working dir
+      # * Yields
+      def lock
+        project.ensure_satellite_exists
+
+        File.open(lock_file, "w+") do |f|
+          begin
+            f.flock File::LOCK_EX
+            yield
+          ensure
+            f.flock File::LOCK_UN
+          end
+        end
+      end
+
+      def lock_file
+        create_locks_dir unless File.exists?(lock_files_dir)
+        File.join(lock_files_dir, "satellite_#{project.id}.lock")
+      end
+
+      def path
+        File.join(Gitlab.config.satellites.path, project.path_with_namespace)
+      end
+
+      def repo
+        project.ensure_satellite_exists
+
+        @repo ||= Grit::Repo.new(path)
+      end
+
+      def destroy
+        FileUtils.rm_rf(path)
+      end
+
+      private
+
+      # Clear the working directory
+      def clear_working_dir!
+        repo.git.reset(hard: true)
+        repo.git.clean(f: true, d: true, x: true)
+      end
+
+      # Deletes all branches except the parking branch
+      #
+      # This ensures we have no name clashes or issues updating branches when
+      # working with the satellite.
+      def delete_heads!
+        heads = repo.heads.map(&:name)
+
+        # update or create the parking branch
+        repo.git.checkout(default_options({ B: true }), PARKING_BRANCH)
+
+        # remove the parking branch from the list of heads ...
+        heads.delete(PARKING_BRANCH)
+        # ... and delete all others
+        heads.each { |head| repo.git.branch(default_options({ D: true }), head) }
+      end
+
+      # Deletes all remotes except origin
+      #
+      # This ensures we have no remote name clashes or issues updating branches when
+      # working with the satellite.
+      def remove_remotes!
+        remotes = repo.git.remote.split(' ')
+        remotes.delete('origin')
+        remotes.each { |name| repo.git.remote(default_options,'rm', name)}
+      end
+
+      # Updates the satellite from bare repo
+      #
+      # Note: this will only update remote branches (i.e. origin/*)
+      def update_from_source!
+        repo.git.remote(default_options, 'set-url', :origin, project.repository.path_to_repo)
+        repo.git.fetch(default_options, :origin)
+      end
+
+      def default_options(options = {})
+        { raise: true, timeout: true }.merge(options)
+      end
+
+      # Create directory for storing
+      # satellites lock files
+      def create_locks_dir
+        FileUtils.mkdir_p(lock_files_dir)
+      end
+
+      def lock_files_dir
+        @lock_files_dir ||= File.join(Gitlab.config.satellites.path, "tmp")
+      end
+    end
+  end
+end
diff --git a/lib/tasks/gitlab/check.rake b/lib/tasks/gitlab/check.rake
index 8acb6a7fd1906493df65359f56aa08f4cd4c2e60..badb47c6779c375140fff3bdad008db73b8f7e72 100644
--- a/lib/tasks/gitlab/check.rake
+++ b/lib/tasks/gitlab/check.rake
@@ -25,6 +25,7 @@ namespace :gitlab do
       check_init_script_exists
       check_init_script_up_to_date
       check_projects_have_namespace
+      check_satellites_exist
       check_redis_version
       check_ruby_version
       check_git_version
@@ -237,6 +238,37 @@ namespace :gitlab do
       end
     end
 
+    def check_satellites_exist
+      print "Projects have satellites? ... "
+
+      unless Project.count > 0
+        puts "can't check, you have no projects".magenta
+        return
+      end
+      puts ""
+
+      Project.find_each(batch_size: 100) do |project|
+        print sanitized_message(project)
+
+        if project.satellite.exists?
+          puts "yes".green
+        elsif project.empty_repo?
+          puts "can't create, repository is empty".magenta
+        else
+          puts "no".red
+          try_fixing_it(
+            sudo_gitlab("bundle exec rake gitlab:satellites:create RAILS_ENV=production"),
+            "If necessary, remove the tmp/repo_satellites directory ...",
+            "... and rerun the above command"
+          )
+          for_more_information(
+            "doc/raketasks/maintenance.md "
+          )
+          fix_and_rerun
+        end
+      end
+    end
+
     def check_log_writable
       print "Log directory writable? ... "
 
@@ -307,6 +339,7 @@ namespace :gitlab do
       check_repo_base_is_not_symlink
       check_repo_base_user_and_group
       check_repo_base_permissions
+      check_satellites_permissions
       check_repos_hooks_directory_is_link
       check_gitlab_shell_self_test
 
@@ -384,6 +417,29 @@ namespace :gitlab do
       end
     end
 
+    def check_satellites_permissions
+      print "Satellites access is drwxr-x---? ... "
+
+      satellites_path = Gitlab.config.satellites.path
+      unless File.exists?(satellites_path)
+        puts "can't check because of previous errors".magenta
+        return
+      end
+
+      if File.stat(satellites_path).mode.to_s(8).ends_with?("0750")
+        puts "yes".green
+      else
+        puts "no".red
+        try_fixing_it(
+          "sudo chmod u+rwx,g=rx,o-rwx #{satellites_path}",
+        )
+        for_more_information(
+          see_installation_guide_section "GitLab"
+        )
+        fix_and_rerun
+      end
+    end
+
     def check_repo_base_user_and_group
       gitlab_shell_ssh_user = Gitlab.config.gitlab_shell.ssh_user
       gitlab_shell_owner_group = Gitlab.config.gitlab_shell.owner_group
diff --git a/lib/tasks/gitlab/enable_automerge.rake b/lib/tasks/gitlab/enable_automerge.rake
new file mode 100644
index 0000000000000000000000000000000000000000..3dade9d75b8b9b0905aef24a94eb87c03fe1a58d
--- /dev/null
+++ b/lib/tasks/gitlab/enable_automerge.rake
@@ -0,0 +1,39 @@
+namespace :gitlab do
+  namespace :satellites do
+    desc "GitLab | Create satellite repos"
+    task create: :environment do
+      create_satellites
+    end
+  end
+
+  def create_satellites
+    warn_user_is_not_gitlab
+
+    print "Creating satellites for ..."
+    unless Project.count > 0
+      puts "skipping, because you have no projects".magenta
+      return
+    end
+    puts ""
+
+    Project.find_each(batch_size: 100) do |project|
+      print "#{project.name_with_namespace.yellow} ... "
+
+      unless project.repo_exists?
+        puts "skipping, because the repo is empty".magenta
+        next
+      end
+
+      if project.satellite.exists?
+        puts "exists already".green
+      else
+        print "\n... "
+        if project.satellite.create
+          puts "created".green
+        else
+          puts "error".red
+        end
+      end
+    end
+  end
+end
diff --git a/spec/lib/gitlab/reference_extractor_spec.rb b/spec/lib/gitlab/reference_extractor_spec.rb
index 088e34f050c317ab91272c69f0a6d63e5c3d4467..f921dd9cc099f0cfc884a0cd195bb3303db9d3ab 100644
--- a/spec/lib/gitlab/reference_extractor_spec.rb
+++ b/spec/lib/gitlab/reference_extractor_spec.rb
@@ -25,7 +25,7 @@ describe Gitlab::ReferenceExtractor do
     project.team << [@u_bar, :guest]
 
     subject.analyze(%Q{
-      Inline code: `@foo`
+      Inline code: `@foo` 
 
       Code block:
 
@@ -33,7 +33,7 @@ describe Gitlab::ReferenceExtractor do
       @bar
       ```
 
-      Quote:
+      Quote: 
 
       > @offteam
     })
@@ -49,8 +49,8 @@ describe Gitlab::ReferenceExtractor do
   end
 
   it 'accesses valid merge requests' do
-    @m0 = create(:merge_request, source_project: project, target_project: project, source_branch: 'markdown')
-    @m1 = create(:merge_request, source_project: project, target_project: project, source_branch: 'feature_conflict')
+    @m0 = create(:merge_request, source_project: project, target_project: project, source_branch: 'aaa')
+    @m1 = create(:merge_request, source_project: project, target_project: project, source_branch: 'bbb')
 
     subject.analyze("!999, !#{@m1.iid}, and !#{@m0.iid}.")
     expect(subject.merge_requests).to eq([@m1, @m0])
diff --git a/spec/lib/gitlab/satellite/action_spec.rb b/spec/lib/gitlab/satellite/action_spec.rb
new file mode 100644
index 0000000000000000000000000000000000000000..0a93676edc3c69cc4a7c6d4553fce696b2f5650f
--- /dev/null
+++ b/spec/lib/gitlab/satellite/action_spec.rb
@@ -0,0 +1,116 @@
+require 'spec_helper'
+
+describe 'Gitlab::Satellite::Action' do
+  let(:project) { create(:project) }
+  let(:user) { create(:user) }
+
+  describe '#prepare_satellite!' do
+    it 'should be able to fetch timeout from conf' do
+      expect(Gitlab::Satellite::Action::DEFAULT_OPTIONS[:git_timeout]).to eq(30.seconds)
+    end
+
+    it 'create a repository with a parking branch and one remote: origin' do
+      repo = project.satellite.repo
+
+      #now lets dirty it up
+
+      starting_remote_count = repo.git.list_remotes.size
+      expect(starting_remote_count).to be >= 1
+      #kind of hookey way to add a second remote
+      origin_uri = repo.git.remote({ v: true }).split(" ")[1]
+
+      repo.git.remote({ raise: true }, 'add', 'another-remote', origin_uri)
+      repo.git.branch({ raise: true }, 'a-new-branch')
+
+      expect(repo.heads.size).to be > (starting_remote_count)
+      expect(repo.git.remote().split(" ").size).to be > (starting_remote_count)
+
+      repo.git.config({}, "user.name", "#{user.name} -- foo")
+      repo.git.config({}, "user.email", "#{user.email} -- foo")
+      expect(repo.config['user.name']).to eq("#{user.name} -- foo")
+      expect(repo.config['user.email']).to eq("#{user.email} -- foo")
+
+
+      #These must happen in the context of the satellite directory...
+      satellite_action = Gitlab::Satellite::Action.new(user, project)
+      project.satellite.lock do
+        #Now clean it up, use send to get around prepare_satellite! being protected
+        satellite_action.send(:prepare_satellite!, repo)
+      end
+
+      #verify it's clean
+      heads = repo.heads.map(&:name)
+      expect(heads.size).to eq(1)
+      expect(heads.include?(Gitlab::Satellite::Satellite::PARKING_BRANCH)).to eq(true)
+      remotes = repo.git.remote().split(' ')
+      expect(remotes.size).to eq(1)
+      expect(remotes.include?('origin')).to eq(true)
+      expect(repo.config['user.name']).to eq(user.name)
+      expect(repo.config['user.email']).to eq(user.email)
+    end
+  end
+
+  describe '#in_locked_and_timed_satellite' do
+
+    it 'should make use of a lockfile' do
+      repo = project.satellite.repo
+      called = false
+
+      #set assumptions
+      FileUtils.rm_f(project.satellite.lock_file)
+
+      expect(File.exists?(project.satellite.lock_file)).to be_falsey
+
+      satellite_action = Gitlab::Satellite::Action.new(user, project)
+      satellite_action.send(:in_locked_and_timed_satellite) do |sat_repo|
+        expect(repo).to eq(sat_repo)
+        expect(File.exists? project.satellite.lock_file).to be_truthy
+        called = true
+      end
+
+      expect(called).to be_truthy
+
+    end
+
+    it 'should be able to use the satellite after locking' do
+      repo = project.satellite.repo
+      called = false
+
+      # Set base assumptions
+      if File.exists? project.satellite.lock_file
+        expect(FileLockStatusChecker.new(project.satellite.lock_file).flocked?).to be_falsey
+      end
+
+      satellite_action = Gitlab::Satellite::Action.new(user, project)
+      satellite_action.send(:in_locked_and_timed_satellite) do |sat_repo|
+        called = true
+        expect(repo).to eq(sat_repo)
+        expect(File.exists? project.satellite.lock_file).to be_truthy
+        expect(FileLockStatusChecker.new(project.satellite.lock_file).flocked?).to be_truthy
+      end
+
+      expect(called).to be_truthy
+      expect(FileLockStatusChecker.new(project.satellite.lock_file).flocked?).to be_falsey
+
+    end
+
+    class FileLockStatusChecker < File
+      def flocked?(&block)
+        status = flock LOCK_EX|LOCK_NB
+        case status
+        when false
+          return true
+        when 0
+          begin
+            block ? block.call : false
+          ensure
+            flock LOCK_UN
+          end
+        else
+          raise SystemCallError, status
+        end
+      end
+    end
+
+  end
+end
diff --git a/spec/lib/gitlab/satellite/merge_action_spec.rb b/spec/lib/gitlab/satellite/merge_action_spec.rb
new file mode 100644
index 0000000000000000000000000000000000000000..9b1c9a34e294198cca4ccd3164e5255e71ad6874
--- /dev/null
+++ b/spec/lib/gitlab/satellite/merge_action_spec.rb
@@ -0,0 +1,104 @@
+require 'spec_helper'
+
+describe 'Gitlab::Satellite::MergeAction' do
+  include RepoHelpers
+
+  let(:project) { create(:project, namespace: create(:group)) }
+  let(:fork_project) { create(:project, namespace: create(:group), forked_from_project: project) }
+  let(:merge_request) { create(:merge_request, source_project: project, target_project: project) }
+  let(:merge_request_fork) { create(:merge_request, source_project: fork_project, target_project: project) }
+
+  let(:merge_request_with_conflict) { create(:merge_request, :conflict, source_project: project, target_project: project) }
+  let(:merge_request_fork_with_conflict) { create(:merge_request, :conflict, source_project: project, target_project: project) }
+
+  describe '#commits_between' do
+    def verify_commits(commits, first_commit_sha, last_commit_sha)
+      commits.each { |commit| expect(commit.class).to eq(Gitlab::Git::Commit) }
+      expect(commits.first.id).to eq(first_commit_sha)
+      expect(commits.last.id).to eq(last_commit_sha)
+    end
+
+    context 'on fork' do
+      it 'should get proper commits between' do
+        commits = Gitlab::Satellite::MergeAction.new(merge_request_fork.author, merge_request_fork).commits_between
+        verify_commits(commits, sample_compare.commits.first, sample_compare.commits.last)
+      end
+    end
+
+    context 'between branches' do
+      it 'should raise exception -- not expected to be used by non forks' do
+        expect { Gitlab::Satellite::MergeAction.new(merge_request.author, merge_request).commits_between }.to raise_error(RuntimeError)
+      end
+    end
+  end
+
+  describe '#format_patch' do
+    def verify_content(patch)
+      sample_compare.commits.each do |commit|
+        expect(patch.include?(commit)).to be_truthy
+      end
+    end
+
+    context 'on fork' do
+      it 'should build a format patch' do
+        patch = Gitlab::Satellite::MergeAction.new(merge_request_fork.author, merge_request_fork).format_patch
+        verify_content(patch)
+      end
+    end
+
+    context 'between branches' do
+      it 'should build a format patch' do
+        patch = Gitlab::Satellite::MergeAction.new(merge_request_fork.author, merge_request).format_patch
+        verify_content(patch)
+      end
+    end
+  end
+
+  describe '#diffs_between_satellite tested against diff_in_satellite' do
+    def is_a_matching_diff(diff, diffs)
+      diff_count = diff.scan('diff --git').size
+      expect(diff_count).to be >= 1
+      expect(diffs.size).to eq(diff_count)
+      diffs.each do |a_diff|
+        expect(a_diff.class).to eq(Gitlab::Git::Diff)
+        expect(diff.include? a_diff.diff).to be_truthy
+      end
+    end
+
+    context 'on fork' do
+      it 'should get proper diffs' do
+        diffs = Gitlab::Satellite::MergeAction.new(merge_request_fork.author, merge_request_fork).diffs_between_satellite
+        diff = Gitlab::Satellite::MergeAction.new(merge_request.author, merge_request_fork).diff_in_satellite
+        is_a_matching_diff(diff, diffs)
+      end
+    end
+
+    context 'between branches' do
+      it 'should get proper diffs' do
+        expect{ Gitlab::Satellite::MergeAction.new(merge_request.author, merge_request).diffs_between_satellite }.to raise_error(RuntimeError)
+      end
+    end
+  end
+
+  describe '#can_be_merged?' do
+    context 'on fork' do
+      it do
+        expect(Gitlab::Satellite::MergeAction.new(merge_request_fork.author, merge_request_fork).can_be_merged?).to be_truthy
+      end
+
+      it do
+        expect(Gitlab::Satellite::MergeAction.new(merge_request_fork_with_conflict.author, merge_request_fork_with_conflict).can_be_merged?).to be_falsey
+      end
+    end
+
+    context 'between branches' do
+      it do
+        expect(Gitlab::Satellite::MergeAction.new(merge_request.author, merge_request).can_be_merged?).to be_truthy
+      end
+
+      it do
+        expect(Gitlab::Satellite::MergeAction.new(merge_request_with_conflict.author, merge_request_with_conflict).can_be_merged?).to be_falsey
+      end
+    end
+  end
+end
diff --git a/spec/models/merge_request_spec.rb b/spec/models/merge_request_spec.rb
index b91687bc09fc9a18f3e565b181beb30420d9ba54..76f6d8c54c4ba2048ab6ed69d7f5234544a1032b 100644
--- a/spec/models/merge_request_spec.rb
+++ b/spec/models/merge_request_spec.rb
@@ -165,7 +165,7 @@ describe MergeRequest do
   end
 
   it_behaves_like 'an editable mentionable' do
-    subject { create(:merge_request) }
+    subject { create(:merge_request, source_project: project) }
 
     let(:backref_text) { "merge request #{subject.to_reference}" }
     let(:set_mentionable_text) { ->(txt){ subject.description = txt } }
diff --git a/spec/models/project_services/slack_service_spec.rb b/spec/models/project_services/slack_service_spec.rb
index 97b60e19e407971a02a182166d24588781254964..69466b11f096dbd8cb53183c0e2e14db8fd253eb 100644
--- a/spec/models/project_services/slack_service_spec.rb
+++ b/spec/models/project_services/slack_service_spec.rb
@@ -67,7 +67,7 @@ describe SlackService do
       opts = {
         title: 'Awesome merge_request',
         description: 'please fix',
-        source_branch: 'feature',
+        source_branch: 'stable',
         target_branch: 'master'
       }
       merge_service = MergeRequests::CreateService.new(project,
diff --git a/spec/models/project_spec.rb b/spec/models/project_spec.rb
index 2fcbd5ae108ae3911b27c314f198d93431953c68..5d40754d59dda7c36b76aa0796fc04fd29aa802b 100644
--- a/spec/models/project_spec.rb
+++ b/spec/models/project_spec.rb
@@ -91,6 +91,7 @@ describe Project do
   describe 'Respond to' do
     it { is_expected.to respond_to(:url_to_repo) }
     it { is_expected.to respond_to(:repo_exists?) }
+    it { is_expected.to respond_to(:satellite) }
     it { is_expected.to respond_to(:update_merge_requests) }
     it { is_expected.to respond_to(:execute_hooks) }
     it { is_expected.to respond_to(:name_with_namespace) }
diff --git a/spec/models/repository_spec.rb b/spec/models/repository_spec.rb
index d96244f23e0e3ddb876ceb7a666ad867d6314faa..d25351b0f0ebd475252c8df428bfaf6f862bf833 100644
--- a/spec/models/repository_spec.rb
+++ b/spec/models/repository_spec.rb
@@ -36,13 +36,13 @@ describe Repository do
 
   describe :can_be_merged? do
     context 'mergeable branches' do
-      subject { repository.can_be_merged?('0b4bc9a49b562e85de7cc9e834518ea6828729b9', 'master') }
+      subject { repository.can_be_merged?('feature', 'master') }
 
       it { is_expected.to be_truthy }
     end
 
     context 'non-mergeable branches' do
-      subject { repository.can_be_merged?('bb5206fee213d983da88c47f9cf4cc6caf9c66dc', 'feature') }
+      subject { repository.can_be_merged?('feature_conflict', 'feature') }
 
       it { is_expected.to be_falsey }
     end
diff --git a/spec/requests/api/files_spec.rb b/spec/requests/api/files_spec.rb
index 8cb8790c33972125d28d0b82b7769386974ecb85..6c7860511e8ff47780ae2b71783228d87b96afe1 100644
--- a/spec/requests/api/files_spec.rb
+++ b/spec/requests/api/files_spec.rb
@@ -110,7 +110,7 @@ describe API::API, api: true  do
       expect(response.status).to eq(400)
     end
 
-    it "should return a 400 if fails to create file" do
+    it "should return a 400 if satellite fails to create file" do
       allow_any_instance_of(Repository).to receive(:remove_file).and_return(false)
 
       delete api("/projects/#{project.id}/repository/files", user), valid_params
diff --git a/spec/requests/api/merge_requests_spec.rb b/spec/requests/api/merge_requests_spec.rb
index 942768fa25462387c6a01175710623ac62e7e762..29db035b2de9b8847d53a59b060049e66d23a2ac 100644
--- a/spec/requests/api/merge_requests_spec.rb
+++ b/spec/requests/api/merge_requests_spec.rb
@@ -148,7 +148,7 @@ describe API::API, api: true  do
       it "should return merge_request" do
         post api("/projects/#{project.id}/merge_requests", user),
              title: 'Test merge_request',
-             source_branch: 'feature_conflict',
+             source_branch: 'stable',
              target_branch: 'master',
              author: user,
              labels: 'label, label2'
@@ -171,20 +171,20 @@ describe API::API, api: true  do
 
       it "should return 400 when target_branch is missing" do
         post api("/projects/#{project.id}/merge_requests", user),
-        title: "Test merge_request", source_branch: "markdown", author: user
+        title: "Test merge_request", source_branch: "stable", author: user
         expect(response.status).to eq(400)
       end
 
       it "should return 400 when title is missing" do
         post api("/projects/#{project.id}/merge_requests", user),
-        target_branch: 'master', source_branch: 'markdown'
+        target_branch: 'master', source_branch: 'stable'
         expect(response.status).to eq(400)
       end
 
       it 'should return 400 on invalid label names' do
         post api("/projects/#{project.id}/merge_requests", user),
              title: 'Test merge_request',
-             source_branch: 'markdown',
+             source_branch: 'stable',
              target_branch: 'master',
              author: user,
              labels: 'label, ?'
@@ -198,7 +198,7 @@ describe API::API, api: true  do
         before do
           post api("/projects/#{project.id}/merge_requests", user),
                title: 'Test merge_request',
-               source_branch: 'feature_conflict',
+               source_branch: 'stable',
                target_branch: 'master',
                author: user
           @mr = MergeRequest.all.last
@@ -208,7 +208,7 @@ describe API::API, api: true  do
           expect do
             post api("/projects/#{project.id}/merge_requests", user),
                  title: 'New test merge_request',
-                 source_branch: 'feature_conflict',
+                 source_branch: 'stable',
                  target_branch: 'master',
                  author: user
           end.to change { MergeRequest.count }.by(0)
@@ -228,8 +228,7 @@ describe API::API, api: true  do
 
       it "should return merge_request" do
         post api("/projects/#{fork_project.id}/merge_requests", user2),
-          title: 'Test merge_request', source_branch: "feature_conflict", target_branch: "master",
-          author: user2, target_project_id: project.id, description: 'Test description for Test merge_request'
+        title: 'Test merge_request', source_branch: "stable", target_branch: "master", author: user2, target_project_id: project.id, description: 'Test description for Test merge_request'
         expect(response.status).to eq(201)
         expect(json_response['title']).to eq('Test merge_request')
         expect(json_response['description']).to eq('Test description for Test merge_request')
@@ -259,7 +258,7 @@ describe API::API, api: true  do
 
       it "should return 400 when title is missing" do
         post api("/projects/#{fork_project.id}/merge_requests", user2),
-        target_branch: 'master', source_branch: 'markdown', author: user2, target_project_id: project.id
+        target_branch: 'master', source_branch: 'stable', author: user2, target_project_id: project.id
         expect(response.status).to eq(400)
       end
 
@@ -268,7 +267,7 @@ describe API::API, api: true  do
           post api("/projects/#{project.id}/merge_requests", user),
                title: 'Test merge_request',
                target_branch: 'master',
-               source_branch: 'markdown',
+               source_branch: 'stable',
                author: user,
                target_project_id: fork_project.id
           expect(response.status).to eq(422)
@@ -278,7 +277,7 @@ describe API::API, api: true  do
           post api("/projects/#{fork_project.id}/merge_requests", user2),
                title: 'Test merge_request',
                target_branch: 'master',
-               source_branch: 'markdown',
+               source_branch: 'stable',
                author: user2,
                target_project_id: unrelated_project.id
           expect(response.status).to eq(422)
@@ -287,7 +286,7 @@ describe API::API, api: true  do
 
       it "should return 201 when target_branch is specified and for the same project" do
         post api("/projects/#{fork_project.id}/merge_requests", user2),
-        title: 'Test merge_request', target_branch: 'master', source_branch: 'markdown', author: user2, target_project_id: fork_project.id
+        title: 'Test merge_request', target_branch: 'master', source_branch: 'stable', author: user2, target_project_id: fork_project.id
         expect(response.status).to eq(201)
       end
     end
@@ -303,6 +302,9 @@ describe API::API, api: true  do
 
   describe "PUT /projects/:id/merge_request/:merge_request_id/merge" do
     it "should return merge_request in case of success" do
+      allow_any_instance_of(MergeRequest).
+        to receive_messages(can_be_merged?: true, automerge!: true)
+
       put api("/projects/#{project.id}/merge_request/#{merge_request.id}/merge", user)
 
       expect(response.status).to eq(200)
diff --git a/spec/routing/project_routing_spec.rb b/spec/routing/project_routing_spec.rb
index 82f62a8709cad58e7334cd5e79122a927063e1cd..0040718d9be4d0293e818e14b722d11d214e7710 100644
--- a/spec/routing/project_routing_spec.rb
+++ b/spec/routing/project_routing_spec.rb
@@ -210,8 +210,8 @@ end
 
 #               diffs_namespace_project_merge_request GET      /:namespace_id/:project_id/merge_requests/:id/diffs(.:format)               projects/merge_requests#diffs
 #             commits_namespace_project_merge_request GET      /:namespace_id/:project_id/merge_requests/:id/commits(.:format)             projects/merge_requests#commits
-#           merge_namespace_project_merge_request POST     /:namespace_id/:project_id/merge_requests/:id/merge(.:format)           projects/merge_requests#merge
-#     merge_check_namespace_project_merge_request GET      /:namespace_id/:project_id/merge_requests/:id/merge_check(.:format)     projects/merge_requests#merge_check
+#           automerge_namespace_project_merge_request POST     /:namespace_id/:project_id/merge_requests/:id/automerge(.:format)           projects/merge_requests#automerge
+#     automerge_check_namespace_project_merge_request GET      /:namespace_id/:project_id/merge_requests/:id/automerge_check(.:format)     projects/merge_requests#automerge_check
 #           ci_status_namespace_project_merge_request GET      /:namespace_id/:project_id/merge_requests/:id/ci_status(.:format)           projects/merge_requests#ci_status
 # toggle_subscription_namespace_project_merge_request POST     /:namespace_id/:project_id/merge_requests/:id/toggle_subscription(.:format) projects/merge_requests#toggle_subscription
 #        branch_from_namespace_project_merge_requests GET      /:namespace_id/:project_id/merge_requests/branch_from(.:format)             projects/merge_requests#branch_from
@@ -233,15 +233,15 @@ describe Projects::MergeRequestsController, 'routing' do
     expect(get('/gitlab/gitlabhq/merge_requests/1/commits')).to route_to('projects/merge_requests#commits', namespace_id: 'gitlab', project_id: 'gitlabhq', id: '1')
   end
 
-  it 'to #merge' do
-    expect(post('/gitlab/gitlabhq/merge_requests/1/merge')).to route_to(
-      'projects/merge_requests#merge',
+  it 'to #automerge' do
+    expect(post('/gitlab/gitlabhq/merge_requests/1/automerge')).to route_to(
+      'projects/merge_requests#automerge',
       namespace_id: 'gitlab', project_id: 'gitlabhq', id: '1'
     )
   end
 
-  it 'to #merge_check' do
-    expect(get('/gitlab/gitlabhq/merge_requests/1/merge_check')).to route_to('projects/merge_requests#merge_check', namespace_id: 'gitlab', project_id: 'gitlabhq', id: '1')
+  it 'to #automerge_check' do
+    expect(get('/gitlab/gitlabhq/merge_requests/1/automerge_check')).to route_to('projects/merge_requests#automerge_check', namespace_id: 'gitlab', project_id: 'gitlabhq', id: '1')
   end
 
   it 'to #branch_from' do
diff --git a/spec/services/merge_requests/create_service_spec.rb b/spec/services/merge_requests/create_service_spec.rb
index cc64d69361e8a57731a528e0bee56b6c79d89a1a..d9bfdf643080752f3ede55ae554b7f590ba8d3c3 100644
--- a/spec/services/merge_requests/create_service_spec.rb
+++ b/spec/services/merge_requests/create_service_spec.rb
@@ -10,7 +10,7 @@ describe MergeRequests::CreateService do
         {
           title: 'Awesome merge_request',
           description: 'please fix',
-          source_branch: 'feature',
+          source_branch: 'stable',
           target_branch: 'master'
         }
       end
diff --git a/spec/services/merge_requests/merge_service_spec.rb b/spec/services/merge_requests/merge_service_spec.rb
index 7b564d34d7b40d2b9c3812d6d200ea44775210e2..0a25fb12f4eaa34e964f97349fa7cb5d9ff197f3 100644
--- a/spec/services/merge_requests/merge_service_spec.rb
+++ b/spec/services/merge_requests/merge_service_spec.rb
@@ -24,6 +24,11 @@ describe MergeRequests::MergeService do
       it { expect(merge_request).to be_valid }
       it { expect(merge_request).to be_merged }
 
+      it 'should execute hooks with merge action' do
+        expect(service).to have_received(:execute_hooks).
+                               with(merge_request, 'merge')
+      end
+
       it 'should send email to user2 about merge of new merge_request' do
         email = ActionMailer::Base.deliveries.last
         expect(email.to.first).to eq(user2.email)
diff --git a/spec/support/mentionable_shared_examples.rb b/spec/support/mentionable_shared_examples.rb
index e3de0afb44825a6b84a7bb9723e22754dfb7538b..f0717e6178198736abbd34558de2ad14c09367a8 100644
--- a/spec/support/mentionable_shared_examples.rb
+++ b/spec/support/mentionable_shared_examples.rb
@@ -9,7 +9,7 @@ def common_mentionable_setup
   let(:author)  { subject.author }
 
   let(:mentioned_issue)  { create(:issue, project: project) }
-  let!(:mentioned_mr)     { create(:merge_request, :simple, source_project: project) }
+  let(:mentioned_mr)     { create(:merge_request, :simple, source_project: project) }
   let(:mentioned_commit) { project.commit }
 
   let(:ext_proj)   { create(:project, :public) }