Lewis Hamilton is to leave Formula One team McLaren and join Mercedes in a three-year deal worth US$100 million, British and German media reports said today.
The agreement, expected to be announced later today, could spell the end of the Formula One career of seven-time world champion Michael Schumacher, who is out of contract at Mercedes at the end of the year.
Sources told DPA Mercedes would not be extending Schumacher's contract, although it is unclear whether the German will go back into retirement or seek a new team.
British newspapers said an announcement could come later on Friday after the Mercedes board had signed a new commercial agreement binding the team to the sport.
The Telegraph said the three-year deal could be worth as much as US$100 million.
Both teams were expected to hold news conferences later in the day.
The decision by Hamilton to leave McLaren will be a major blow to the British team which had offered their driver a new deal.
Hamilton had been under contract since he was 13-years-old and won the world drivers championship in 2008.
The 27-year-old has reportedly been told by Mercedes he will be the number one driver, partnering German Nico Rosberg.
The Briton is fourth in the overall standings, 52 points behind leader Fernando Alonso heading into the last six races after suffering a gearbox failure during the Singapore Grand Prix.
Hamilton has won three races this season, in Canada, Hungary and Italy, and finished on the podium in the opening three races in Australia, Malaysia and China.
A possible move by Schumacher to another team "is not an issue today," his manager Sabine Kehm told DPA.
Schumacher returned to Formula One in 2010 after a three-year absence, but has registered only a single podium place with Mercedes since then.
On Thursday, Mercedes team principal Ross Brawn told the BBC that Schumacher had "been a huge asset to the team, he's really taken us forward."
He added: "I do think Michael contributes an awful lot, so I think the decision for Michael to stay or not continue is a difficult one.
"Obviously he's very involved in that decision, and discussions are ongoing at the moment."