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You may copy contents of a first file to [new.$] file. After that, you may add contents of a second file to [new.$] and then delete first file and rename [new.$] file to name of the first file.

procedure TForm1.Button3Click(Sender: TObject);
var
  Str: string;
  F1, F2, F3: TextFile;
begin
  Label3.Caption:='Processing...';
  AssignFile(F1, Edit1.Text);
  AssignFile(F2, Edit2.Text);
  AssignFile(F3, 'new.$');
  Reset(F1);
  Reset(F2);
  Rewrite(F3);
  while not(EOF(F1)) do
  begin
    Readln(F1, Str);
    Writeln(F3, Str);
  end;
  while not(EOF(F2)) do
  begin
    Readln(F2, Str);
    Writeln(F3, Str);
  end;
  CloseFile(F1);
  CloseFile(F2);
  CloseFile(F3);
  DeleteFile(ExtractFileName(Edit1.Text));
  RenameFile('new.$', ExtractFileName(Edit1.Text));
  DeleteFile('new.$');
  Label3.Caption:='Processing done';
end;

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