Excel does not support Autofit feature for merged cells:
https://support.microsoft.com/en-us/help/212010/you-cannot-use-the-autofit-feature-for-rows-or-columns-that-contain-me

It would be nice to implement this support for ER outputs in Excel format for rows containing merged cells with the turned on 'Wrap text' option. This can be controlled by a new feature in the Feature management.

Reference work item - 519133