The German car maker will take a 75 per cent stake in the Brawn GP squad, but will continue as an engine supplier to McLaren - in which it holds a 40 per cent stake - for the foreseeable future.
The CEO of Mercedes, Dieter Zetzche, and motorsport boss, Norbert Haug, are expected to reveal details of the deal in a press conference later today (Monday 16th November) - including what the company plans to do with its 40 per cent shareholding in McLaren.
According to the BBC, the new Brawn-Mercedes driver line-up is expected to consist of Nico Rosberg as the lead driver with Nick Heidfeld in the second seat. Ross Brawn is expected to remain as team principal.
World champion Jenson Button is expected to jump ship to McLaren to Partner Lewis Hamilton. Button had been angling for a pay rise over his current £3.5m Brawn GP salary, but Mercedes is said to have no interest in retaining his services at Brawn.
McLaren is rumoured to have offered Button around double what he was on at Brawn, although paddock gossip suggests that McLaren's 2010 contender will actually be more competitive than the 2010 Brawn, too.