Mercedes-AMG AG has bought Formula One franchise Red Bull Racing for an undisclosed sum, the team said on Tuesday.
Red Bull Racing has been on a downward trend since the end of last season when it was forced to withdraw from the championship after the FIA announced it would suspend its sanctioning of the team.
The team said it would retain its name and brand and that it would also retain its commercial and social responsibility as an organisation and a brand.
Its move comes at a critical time for Red Bull in the wake of a series of controversies, including a $40m financial settlement with a former employee over claims she had been paid bribes, and allegations that it failed to deliver on its promises.
Mercedes is the world’s fifth-largest carmaker and has been in the sport since 2000.
The team is also the largest private sponsor of Formula One, having signed a six-year deal worth up to $50m in 2016, although it did not formally announce the new agreement.
“We are very happy to partner with Mercedes- AMG, a brand that is globally recognised, and to be a part of a team that has become a global leader in motorsport,” Red Bull said in a statement.
Formula One’s governing body has repeatedly ruled that teams can’t have commercial partnerships with sponsors, but it has not banned them entirely.
With Red Bull’s departure, the sport has entered a period of uncertainty as it looks to revive its fortunes.
A deal with Mercedes could help revive Formula One’s fortunes in China, where the sport is expected to continue to be an attractive proposition for the Chinese market.
China is a key market for Formula One because of its economic clout and the presence of state-owned companies that have invested heavily in the country’s motorsport sector.
But in the United States, which has seen its sport languish for years due to the sport’s poor financial performance, the prospect of Mercedes-amg joining the sport in the future will be welcome news.
Despite the financial woes that have marred its relationship with the sport, the company has been at the forefront of efforts to revive the sport by sponsoring teams, including McLaren and Ferrari, and is currently involved in a joint venture with a number of teams.
In recent years, Red Bull has also been working with Formula One to develop the sport and create a sustainable business model, with the aim of being a multi-billion dollar company in the next two decades.
It has also invested heavily on developing artificial intelligence, artificial intelligence training and autonomous vehicles, and has worked closely with teams such as Ferrari to develop their technology.
This latest move comes a week after the Formula One governing body revealed it had taken steps to rein in its financial dealings with Red Bull.
Last year, it was reported that Red Bull had agreed to a $25m settlement to resolve claims that it had paid bribes to employees of a former Ferrari employee, who was subsequently fired by the team in a controversial decision.