Formula One champions Brawn GP will compete next season as the official Mercedes factory team after the German carmaker announced a takeover on Monday.
Daimler chairman Dieter Zetsche, whose company owns Mercedes, told reporters that Ross Brawn would remain principal of the British-based team while the carmaker will continue to supply long-term partners McLaren with engines until at least the end of 2015.
"In the changed environment of Formula One, we will face the competition on the most important motor sports stage from now on with our own Silver Arrows works team," he said.
Mercedes had been 40 percent shareholders in McLaren but that team, who won the title last year with Lewis Hamilton, said in a separate statement that they had agreed to buy back the stake by 2011.
Brawn GP, who emerged from the remains of departed Honda, won the championship in their debut season at the Brazilian Grand Prix last month with Britain's Jenson Button also securing the drivers' title.
Mercedes would not comment on who would be driving for Brawn, although Germany' Nico Rosberg looks certain to be in the lineup.
Button is out of contract and has also been talking to McLaren.
The deal, which had been expected, gives Mercedes a majority shareholding in Brawn along with Abu Dhabi investment company Aabar, who own 9.1 percent of Daimler.
The two combined will own 75.1 percent of Brawn, with Daimler holding 45.1 percent.
"Brawn GP has been through an incredible journey over the last 12 months," said Brawn in a statement.
"From fighting for our survival to forging a strong relationship with Mercedes-Benz High Performance Engines, winning both the Constructors' and Drivers' World Championships, and now accepting Aabar and Daimler's offer to buy our team which will secure its future."
Mercedes exit is good for McLaren, says Dennis
Mercedes' decision to buy Formula One champions Brawn and sell their stake in McLaren is good for all those involved, according to McLaren co-owner and former team head Ron Dennis.
"This is a win-win situation, for both McLaren and Daimler," Dennis said in a McLaren statement after the deal was announced on Monday.
"I've often stated that it's my belief that, in order to survive and thrive in 21st-century Formula One, a team must become much more than merely a team," added the former principal who handed over to Martin Whitmarsh this year.
"That being the case, in order to develop and sustain the revenue streams required to compete and win grands prix and world championships, companies that run Formula One teams must broaden the scope of their commercial activities."