  ABRIDGED: We use deep optical, IR and radio observations to explore the
symbiosis between the nuclear activity and galaxy evolution in the southern
compact radio source PKS1549-79 (z=0.1523). The optical imaging observations
reveal the presence of tidal tail features which provide strong evidence that
the host galaxy has undergone a major merger in the recent past. This is
further supported by the detection of a young stellar population which was
formed 50-250Myr ago and makes up 1-30% of the total stellar mass. Despite the
core-jet structure of the radio source we detect HI absorption associated with
both the core and the jet. The luminous, quasar-like AGN (M_V < -23.5) is
highly extinguished (A_v > 4.9) at optical wavelengths and shows many
properties in common with narrow line Seyfert 1 galaxies (NLS1), including
relatively narrow permitted lines (FWHM ~ 1940 km/s), highly blueshifted [OIII]
lines (~680 km/s), and evidence that the putative supermassive black hole is
accreting at a high Eddington ratio. This suggests that accretion at high
Eddington ratio does not prevent the formation of powerful jets. Our
observations lend strong support to the predictions of some recent numerical
simulations of galaxy mergers in which the black hole grows rapidly through
merger-induced accretion following the coalescence of the nuclei of two merging
galaxies; the major growth phase largely hidden by the natal gas and dust.
Although the models predict that AGN-driven outflows will eventually remove the
gas from the bulge of the host galaxy, the visible warm outflow in PKS1549-79
is not currently capable of doing so. ABRIDGED
