I've had a look in the rulebook and I haven't really been able to find anything that guides me on this one. Haven't played in a long time...

Is there a specific way you have to deploy your warbands? IE as a block with the warband captain? and is it allowed for warbands from allied contingents to merge?

For example, warband from the army of Thror consisting of a Captain of Erebor and 12 Warriors of Erebor with Spears and Shields and a second warband from Durins folk with Balin and 12 Dwarf Warriors with shields.

Would I be allowed to use them as a single block with the Warriors of Erebor supporting the Dwarf warriors?

In the deployment phase, warbands have to be placed one at a time. in this case you'll have to deploy one first, then the other.

You can, however, place one warband in a single line and then place the spearmen's warband right behind as second deployment. But in most scenario you have to roll to place your warband, so this tactic may fail.

once the game start they can merge and do whatever you like.

Pages 104-109, the scenarios.
The recurring theme seems to be that they need to be deployed within 6" of the warband captain. No other limitation.

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