diff --git a/mysql-test/r/derived_view.result b/mysql-test/r/derived_view.result
index ef8e0a2a9cb..9e6d6db9314 100644
--- a/mysql-test/r/derived_view.result
+++ b/mysql-test/r/derived_view.result
@@ -2087,6 +2087,24 @@ a	b
 drop table t1;
 set optimizer_switch=@save978847_optimizer_switch;
 #
+# LP bug998516 Server hangs on INSERT .. SELECT with derived_merge,
+# FROM subquery, UNION 
+#
+CREATE TABLE t1 (a INT);
+INSERT INTO t1 VALUES (1),(2);
+CREATE TABLE t2 (b INT);
+INSERT INTO t2 VALUES (3),(4);
+INSERT INTO t1 SELECT * FROM ( SELECT * FROM t1 ) AS alias UNION SELECT * FROM t2;
+select * from t1;
+a
+1
+2
+1
+2
+3
+4
+drop table t1,t2;
+#
 # end of 5.3 tests
 #
 set optimizer_switch=@exit_optimizer_switch;
diff --git a/mysql-test/t/derived_view.test b/mysql-test/t/derived_view.test
index 3320ca25136..30811be2934 100644
--- a/mysql-test/t/derived_view.test
+++ b/mysql-test/t/derived_view.test
@@ -1437,6 +1437,19 @@ drop table t1;
 
 set optimizer_switch=@save978847_optimizer_switch;
 
+
+--echo #
+--echo # LP bug998516 Server hangs on INSERT .. SELECT with derived_merge,
+--echo # FROM subquery, UNION 
+--echo #
+CREATE TABLE t1 (a INT);
+INSERT INTO t1 VALUES (1),(2);
+CREATE TABLE t2 (b INT);
+INSERT INTO t2 VALUES (3),(4);
+INSERT INTO t1 SELECT * FROM ( SELECT * FROM t1 ) AS alias UNION SELECT * FROM t2;
+select * from t1;
+drop table t1,t2;
+
 --echo #
 --echo # end of 5.3 tests
 --echo #
diff --git a/sql/sql_base.cc b/sql/sql_base.cc
index 38e56a49767..628a4bfd919 100644
--- a/sql/sql_base.cc
+++ b/sql/sql_base.cc
@@ -1739,8 +1739,8 @@ retry:
                  ("convert merged to materialization to resolve the conflict"));
       derived->change_refs_to_fields();
       derived->set_materialized_derived();
+      goto retry;
     }
-    goto retry;
   }
   DBUG_RETURN(res);
 }