[Solved] IEnumerable Merge

I named your first model OldCategory. Query:

        var categories = new OldCategory[]
        {
            new OldCategory {CategoryId = 1, SubCategoryId = 2},
            new OldCategory {CategoryId = 1, SubCategoryId = 4}
        };

        var newCategories = categories
            .GroupBy(_ => new
            {
                Id = _.CategoryId, 
                Name = _.CategoryName
            })
            .Select(_ => new Category
            {
                CategoryId = _.Key.Id, 
                CategoryName = _.Key.Name, 
                SubCategories = _.Select(sc => new SubCategory {SubCategoryId = sc.SubCategoryId, SubCategoryName = sc.SubCategoryName})
            })
            .ToArray();