When LVM is used Converter creates a separate vmdk for each volume group. If you do the conversion with changing to basic volumes, you can move all volumes to a single disk (see the wizard data-to-copy, advanced, destination layout). Otherwise the VG is a separate vmdk, this is by design.
So that means there is no option for single VMDK but how about merging both the disk using vdiskmanager? Will the VM boot from the merged single VMDK? or it will fail?
It will almost certainly fail unless you teak some configuration. I haven't done that, so what follows is speculation.
I suppose the boot partition is on the first volume (xvdb1). If you merge the second disk to the first, at least grub.cfg will likely remain accurate. However you will likely need to recreate the initrd image; /etc/fstab will be inaccurate; perhaps LVM metadata, too.