Found a solution to your problem as given below:
The gradle assemble -info gave me a hint that my Manifests have the different SDK Versions and so cannot be merged.
So I needed to edit the Manifests and build.gradle file and after that everything worked again.
To be very clear you need to edit your uses-sdk in your AndroidManifest.xml
<uses-sdk android:minSdkVersion="14" android:targetSdkVersion="16" />
And your android section, particularly the minSdkVersion and targetSdkVersion in your build.gradle file as shown below.
I also faced the same issue while adding ActionBarShelock to my project, by comparing to my older library I found that the application tag is missing in my manifest. So just by adding the one line I fixed the issue.