Tauranga and Auckland's port merger plan is fertile ground for conspiracy theories. In the heady few hours after the deal emerged, it was seen as a capitulation by Ports of Auckland.

It was a sign the international shipping line Maersk, due to disclose which port would host its container ships, had chosen Tauranga over Auckland. And that Auckland needed Tauranga to shore up its business.

How else could two entities that for years competed with no holds barred have suddenly begun to talk about co-operation?

It also reflected a bid by Auckland Regional Council - the ultimate owner of the Auckland port - to further its development plans on the waterfront. The subtext of this claim was that the politicians were sacrificing the interests of exporters for a park along the waterfront.

The deal was the beginning of the end for Ports of Auckland. Once done, the ARC would still own a cash cow to fund regional development, but the port would gradually wilt.

There are good reasons to doubt all these theories.

Maersk set the capitulation theory to rest on Thursday when it defied all predictions by saying it had not made up its mind.

Some have suggested that the shipping line could have changed its mind when it saw the details of the merger. But it is not apparent that the merger by itself would have altered its decision. Surely if it had decided, it would have pushed ahead with its plans in any case. This latest delay perhaps unmasks Maersk's prevarication as a strategy of divide and rule.

It is less easy to dismiss concerns over power plays by the ARC, only because, in the Byzantine world of local politics, real conspiracies are de rigueur. But, it seems the ARC, its ventures division and port shareholder Auckland Regional Holdings and the port are - if not talking in unison - at the very least on the same page.

This merger is being contemplated for the very best of reasons - bulking up to counter the growing strength of the international shipping lines, avoiding duplication of expensive infrastructure and cargo-handling equipment, and putting in place a high-speed motorway to markets.

For one, the deal is to be structured as a merger of equals, easing fears that one region will dominate the other. Shareholders in Port of Tauranga and Ports of Auckland (the ARC) will get equal shares of the new company, the listed vehicle that is now Port of Tauranga, but will be renamed something along the lines of Port of New Zealand.

Second - and this is the bit that should ease many of the fears about local politics - the land occupied by the ports is likely to be excluded from the merged company. Instead, Port of New Zealand is likely to be offered a long-term lease on the land with the caveat it be returned to regional ownership if it is no longer required for port purposes.

Such a structure will avoid arguments over ownership of the waterfront, while letting land be released for other uses without compromising demands of exporters and importers.

The financial arguments also look as if they stack up, for the ARC at least.

First NZ Capital's head of research, Rob Bode, notes that the ARC needs on average $93 million a year, but its income-generating assets (shares, bonds and the port) are producing only $55 million to $60 million. Bode estimates cost savings from the merger that could feed down to dividends could go a long way to plugging the ARC's funding hole, perhaps even filling it entirely.

Still, it is not a done deal. Politics could kill it.

The ARC would have safeguarded the waterfront land, but in exchange it would cede control over the port on its patch. Bode, for example, says a merger of equals could leave the ARC with 39 per cent, the Bay of Plenty Regional Council with 33 per cent and the rest held by minorities.

The ARC would still be the largest shareholder and as a result could appoint the chairman, giving it the casting vote in contentious decisions. But the new company will be subject to the disciplines of the stock market, forcing directors, including the ARC-appointed ones, to act in the best interests of the whole shareholder base.

It is inevitable that in some cases this may mean choosing Tauranga over Auckland. It is also not clear how the structure will suit politicians such as ARC chairman Mike Lee, a vocal advocate of public ownership.

The choice - if Bode is correct - is just as stark for the Bay of Plenty Regional Council, which now has effective control of the Tauranga port, but will be relegated to a minority in the new company. It will have to come up with convincing arguments that it is not ceding power to the north.

The merger depends on the green light from the Government,which would have to agree the loss of competition between ports would be mitigated by the gains for New Zealand Inc, the same argument used to justify the creation of Fonterra.

Economic Development Minister Trevor Mallard yesterday gave an encouraging hint the Beehive was open to the idea, saying that "having a co-ordinated approach to infrastructure issues, including ports, rail and road is important for economic development".

But the Government remains to be convinced.

Also, the quid pro quo for its agreement is the creation of a regulatory regime, and this should give all parties pause for thought.

Yesterday, the Commerce Commission, for instance, stepped back from its assertion Vector was making an excessive return on its assets.

Such flip-flops have already damaged New Zealand's reputation and, without an overhaul of the regime, some of the gains from the merger could be lost by subjecting the proposed new company to regulatory uncertainty.