Maggie and Glenn had been taken by Merle, back to Woodbury. Following that, Michonne found the prison, met Rick and the group, and informed them of Maggie and Glenn’s capture.

Rick, Michonne, Daryl and you went to Woodbury, and successfully saved Glenn and Maggie. But in turn, Daryl had been taken. The Governor put him, and his previously lost brother Merle in the middle of the fighting pit.

Daryl hadn't seen Merle in a good year or two, not since he got lost in Atlanta. Merle, determined not too loose his brother again, got out with Daryl.

After a fight, Daryl and Merle left to be on their own, but eventually Daryl convinced Merle to come back with them to the Prison.

So now, Merle was staying in the prison with you all. You had just gotten back inside from killing Walker’s at the fence, and were getting some water when Merle came over.