We observed collision and coalescence after application of large step shear strains for two polyisobutylene (PIB) droplets in polydimethylsiloxane (PDMS) matrix using a stereo microscope. When coalescence occurred, interface vanished in an overlapped area of deformed droplets. Then a single droplet recovered to spherical shape. Time necessary for recovery to spherical shape with coalescence was longer than that without coalescence. Coalescence was easy to occur for larger strain and smaller d 0 /r 0 , where d 0 and r 0 represent initial distance between centers of droplets and initial droplet radius, respectively. In the case of shape recovery without coalescence, the distance between the centers after shape recovery was smaller than d 0 . Time dependence of shape of droplets was similar in both cases with coalescence and without coalescence. Ratio of length of overlap, l ov ', to length of semi major axis, a', in view perpendicular to shear plane determines occurrence of coalescence.