Photomerge works fine directly from raw files. Just select them in Bridge and go to Tools > Photoshop > Photomerge. This will open Photoshop, with the Photomerge dialog all set and ready to click OK.
Of course this will just use the default rendering, so you might want to edit them in ACR first, and then click "Done" to commit your edits.
Stay away from jpeg at this stage. Jpeg is a lossy and destructive format and your files will quickly deteriorate. Save a copy of the finished file to jpeg when you're all done, if that's what you need.