@Albertk
The workaround I've found is to use Git outside of VS. I agree this is a pain, but MS seem to have a very one-dimensional view of how you should use Git.
I installed Git-Bash some time ago and the commands
git checkout master
git merge version2
should work on your local repository.
You probably should close down VS (or at least the project) before doing this - I've not tried with VS open in case it breaks something.