We use deep optical, infrared and radio observations to explore the symbiosis between nuclear activity and galaxy evolution in the southern compact radio source PKS 1549-79 (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. The merger hypothesis is further supported by the detection of a young stellar population ( YSP), which, on the basis of spectral synthesis modelling of our deep Very Large Telescope (VLT) optical spectra, was formed 50-250 Myr ago and makes up a significant fraction of the total stellar mass (1-30 per cent). Despite the core-jet structure of the radio source, which is consistent with the idea that the jet is pointing close to our line of sight, our HI 21-cm observations reveal significant HI absorption associated with both the core and the jet. Moreover, the luminous, quasar-like active galactic nucleus (AGN) (M V <-23.5) is highly extinguished (A v > 6.4) at optical wavelengths and show many properties in common with narrow-line Seyfert 1 galaxies (NLS1), including relatively narrow permitted lines [full width at half-maximum (FWHM) ∼ 1940 km s -1], highly blueshifted [O III] λλ5007, 4959 lines (ΔV ∼ 680 km s -1) and evidence that the putative supermassive black hole is accreting at a high Eddington ratio (0.3 <Z- bol/L edd <11). The results suggest that accretion at high Eddington ratio does not prevent the formation of powerful relativistic jets. Together, the 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, and the major growth phase is largely hidden at optical wavelengths by the natal gas and dust. Although the models also predict that AGN-driven outflows will eventually remove the gas from the bulge of the host galaxy, the visible warm outflow in PKS 1549-79 is not currently capable of doing so. However, much of the outflow may be hidden by the material obscuring the quasar and/or tied up in hotter or cooler phases of the interstellar medium. By combining our estimates of the reddening of the quasar with the Hi column derived from the 21-cm radio observations, we have also made the first direct estimate of the Hi spin temperature in the vicinity of a luminous AGN: T spin > 3000 K.