merge.py

import itertools

lines = list()
lines.append(open('1.txt').readlines())
lines.append(open('2.txt').readlines())

combinations = list(itertools.product(*lines))

with open('result.txt', 'w') as result:
        for combination in combinations:
                line  = ''.join([s.strip() for s in combination])
                line += '\r\n'
                result.write(line)