Illustrator: How to merge to circles and rectangle in illustrator from this sketch to make a blob?

How to merge to circles and rectangle in illustrator from this sketch to make a blob?

Now I'm trying to get this logo (using these shapes). Should I use the Metaball tool to create the one shape or another way?

Trying to get this shape happening (see left)

Answer

Like this?

If so then this should do the trick: http://shspage.com/aijs/en/#metaball

Note that you might want to play with the metaball parameter and interior circle size to get a smoother curve on the ends.