Lewis Hamilton is set for a move to Mercedes, according to widespread reports in the English press.
Hamilton has been in talks with McLaren over a new deal all season, but both parties have failed to come to an agreement with McLaren refusing to match the £15 million ($23.8 million) a year he earns currently with the team.
Hamilton's representatives had sounded out the possibility of signing a contract with Red Bull and Ferrari, but both teams apparently passed on the signing.
According to the Daily Mail, Mercedes are ready to offer Hamilton a three-year contract worth a total of £60 million ($95.4 million).
McLaren issued a statement saying talks were still on a new contract and that there was no agreement between Mercedes and their driver. "We have been told by Lewis Hamilton's management team that the story is untrue," a McLaren spokesman said. "Negotiations between Lewis Hamilton and McLaren continue."
Mercedes refused to be drawn out on the speculation, saying: "Until we are in a position to confirm our full driver line-up for next season, it is inevitable that there will be speculation around this topic. We would ask for your understanding, however, that we do not comment on speculation."
According to BBC analyst Eddie Jordan a deal has already been agreed between the two parties and believes Hamilton will replace Michael Schumacher, who has hinted at retirement at the end of the season. "I believe Hamilton and Mercedes have already agreed personal terms and a deal could be imminent," Jordan said.
"Some weeks ago, I said on TV that I felt Lewis was on the move and I had an idea at the time he had been speaking to Ferrari, which we now know is true.
"But I can now confirm his people have had meetings with Mercedes. Bernie Ecclestone made it clear to me live on television on Sunday that Schumacher was leaving, although Schumacher later played it down.
"So it would appear Michael is leaving and Lewis is arriving at Mercedes. Hamilton has not agreed terms with McLaren yet. In fact, the team have made it clear they cannot offer him as big a salary as his current deal, which was negotiated before the global financial crisis.
"On top of that, McLaren have to pay for their Mercedes engines for the first time next year."