Merging-compression is a solenoid-free plasma formation method used in spherical tokamaks (STs). Two plasma rings are formed and merged via magnetic reconnection into one plasma ring that then is radially compressed to form the ST configuration. Plasma currents of several hundred kA and plasma temperatures in the keV-range have been produced using this method, however until recently there was no full understanding of the merging-compression formation physics. In this paper we explain in detail, for the first time, all stages of the merging-compression plasma formation. This method will be used to create ST plasmas in the compact (R ~ 0.4–0.6 m) high field, high current (3 T/2 MA) ST40 tokamak. Moderate extrapolation from the available experimental data suggests the possibility of achieving plasma current ~2 MA, and 10 keV range temperatures at densities ~1–5 × 1020 m−3, bringing ST40 plasmas into a burning plasma (alpha particle heating) relevant conditions directly from the plasma formation. Issues connected with this approach for ST40 and future ST reactors are discussed