diff --git a/app/models/project/hooks_trait.rb b/app/models/project/hooks_trait.rb
index f642ac97..2f97eb6c 100644
--- a/app/models/project/hooks_trait.rb
+++ b/app/models/project/hooks_trait.rb
@@ -101,6 +101,9 @@ module Project::HooksTrait
 
       # Execute web hooks
       self.execute_web_hooks(oldrev, newrev, ref, user)
+
+      # Create satellite
+      self.satellite.create unless self.satellite.exists?
     end
   end
 end
diff --git a/app/models/project/repository_trait.rb b/app/models/project/repository_trait.rb
index 2cd8159a..d8bdbf24 100644
--- a/app/models/project/repository_trait.rb
+++ b/app/models/project/repository_trait.rb
@@ -37,6 +37,10 @@ module Project::RepositoryTrait
       end
     end
 
+    def satellite
+      @satellite ||= Gitlabhq::Satellite.new(self)
+    end
+
     def write_hook(name, content)
       hook_file = File.join(path_to_repo, 'hooks', name)
 
diff --git a/lib/gitlab_merge.rb b/lib/gitlab_merge.rb
index 8e276e0d..98772bf0 100644
--- a/lib/gitlab_merge.rb
+++ b/lib/gitlab_merge.rb
@@ -1,23 +1,20 @@
 class GitlabMerge
-  attr_accessor :project, :merge_path, :merge_request, :user
+  attr_accessor :project, :merge_request, :user
 
   def initialize(merge_request, user)
     self.user = user
     self.merge_request = merge_request
     self.project = merge_request.project
-    self.merge_path = File.join(Rails.root, "tmp", "merge_repo", project.path, merge_request.id.to_s)
-    FileUtils.rm_rf(merge_path)
-    FileUtils.mkdir_p merge_path
   end
 
   def can_be_merged?
-    pull do |repo, output|
+    process do |repo, output|
       !(output =~ /Automatic merge failed/)
     end
   end
 
   def merge
-    pull do |repo, output|
+    process do |repo, output|
       if output =~ /Automatic merge failed/
         false  
       else 
@@ -27,19 +24,23 @@ class GitlabMerge
     end
   end
 
-  def pull
+  def process
     Grit::Git.with_timeout(30.seconds) do 
       File.open(File.join(Rails.root, "tmp", "merge_repo", "#{project.path}.lock"), "w+") do |f|
         f.flock(File::LOCK_EX)
         
-        self.project.repo.git.clone({:branch => merge_request.target_branch}, project.url_to_repo, merge_path)
-        unless File.exist?(self.merge_path)
-          raise "Gitlab user do not have access to repo. You should run: rake gitlab_enable_automerge"
+        unless project.satellite.exists?
+          raise "You should run: rake gitlab_enable_automerge"
         end
-        Dir.chdir(merge_path) do
+
+        project.satellite.clear
+
+        Dir.chdir(project.satellite.path) do
           merge_repo = Grit::Repo.new('.')
+          merge_repo.git.sh "git fetch origin"
           merge_repo.git.sh "git config user.name \"#{user.name}\""
           merge_repo.git.sh "git config user.email \"#{user.email}\""
+          merge_repo.git.sh "git checkout -b #{merge_request.target_branch} origin/#{merge_request.target_branch}"
           output = merge_repo.git.pull({}, "--no-ff", "origin", merge_request.source_branch)
           yield(merge_repo, output)
         end
diff --git a/lib/gitlabhq/satellite.rb b/lib/gitlabhq/satellite.rb
new file mode 100644
index 00000000..cd713a64
--- /dev/null
+++ b/lib/gitlabhq/satellite.rb
@@ -0,0 +1,41 @@
+module Gitlabhq
+  class Satellite
+    
+    PARKING_BRANCH = "__parking_branch"
+
+    attr_accessor :project
+
+    def initialize project
+      self.project = project
+    end
+
+    def create
+      `git clone #{project.url_to_repo} #{path}`
+    end
+
+    def path
+      File.join(Rails.root, "tmp", "repo_satellites", project.path)
+    end
+
+    def exists?
+      File.exists? path
+    end
+
+    #will be deleted all branches except PARKING_BRANCH
+    def clear
+      Dir.chdir(path) do
+        heads = Grit::Repo.new(".").heads.map{|head| head.name}
+        if heads.include? PARKING_BRANCH
+          `git checkout #{PARKING_BRANCH}`
+        else
+          `git checkout -b #{PARKING_BRANCH}`
+        end
+        heads.delete(PARKING_BRANCH)
+        heads.each do |head|
+          `git branch -D #{head}`
+        end
+      end
+    end
+    
+  end
+end
diff --git a/lib/tasks/gitlab/enable_automerge.rake b/lib/tasks/gitlab/enable_automerge.rake
index 5136011e..647e06f6 100644
--- a/lib/tasks/gitlab/enable_automerge.rake
+++ b/lib/tasks/gitlab/enable_automerge.rake
@@ -6,6 +6,13 @@ namespace :gitlab do
         git.admin_all_repo
       end
 
+      Project.find_each do |project|
+        if project.repo_exists? && !project.satellite.exists?
+          puts "Creating satellite for #{project.name}...".green
+          project.satellite.create
+        end
+      end
+
       puts "Done!".green
     end
   end