When you update to Hangouts version 11.0 on Android, you won't be able to merge your Hangouts and text (SMS) conversations.
Why merged conversations aren't available any more
Merged conversations used to let you see your Hangouts messages and text messages in the same conversation. We have decided to remove it, because it caused user confusion and had low usage.
For the best SMS text messaging experience, we recommend using Google's Messenger app.
What happens to previously merged conversations
When you update to Hangouts version 11.0 on Android, you'll no longer see your Hangouts and SMS text messages with the same contact merged into one conversation. Instead, all your Hangouts chat conversations and SMS text conversations will appear separately.
Did I lose any of my messages?
No! You can still see all your messages in Hangouts.
How do I know if I am in a Hangouts or text conversation?
When you're looking at your list of conversations, an icon on your contact's profile photo shows if it's an SMS conversation.
- Hangouts chat: No indicator.
- Carrier text: Gray SMS icon
. - Google Voice / Project Fi text: Blue SMS icon
.
When you're looking at the history of a conversation, each message's timestamp will show if it's an SMS conversation.
- Hangouts chat: No indicator.
- Carrier text: Timestamp says "via SMS."
- Google Voice text: Timestamp says "via Google Voice."
- Project Fi text: Timestamp says "via Project Fi."
How do I send a Hangouts message?
When you compose a new message, tap Add 
New conversation. Learn more about starting a Hangout.
How do I send an SMS text message?
When you compose a new message, tap Add New SMS. Learn more about sending a text.
Source - https://support.google.com/hangouts/answer/6005073?hl=en
