BMW handed control of their Formula One team back to founder Peter Sauber on Friday after cancelling a planned sale to mysterious Swiss-based foundation Qadbak Investments.
"On Thursday, BMW AG reached an agreement with Peter Sauber regarding the sale of the BMW-Sauber F1 team," BMW said in a statement.
"The contract is subject to the condition that the team has a starting place for the 2010 Formula One season."
BMW said the agreement meant that "the sale to Qadbak Investment Ltd. that was initially planned will not be completed."
It added that a further agreement with Sauber would cut the workforce at the Hinwil factory from 388 people to around 250, with redundancy notices issued on Friday.
The Munich carmaker, who won just one race in their time as BMW-Sauber, warned that further job losses could follow but said it would support the restructuring.
BMW, who bought an 80 percent stake in the Swiss-based Sauber team in 2005, announced in July that they were pulling out of Formula One.
In September, they agreed a deal to sell the team to Qadbak, who were described as representing unnamed Middle Eastern interests.
Qadbak had also bought fourth division Notts County, England's oldest football league club, through their Munto Finance Company.
BMW-Sauber have since lost their guaranteed place on the 2010 starting grid to Malaysian-backed Lotus F1 but were thrown a lifeline by Japanese car giant Toyota's decision this month to also leave the sport.
However, the governing FIA has yet to confirm the team as the 13th entry, amid concerns about finances and individuals linked to the proposed Qadbak takeover.
"We are very happy with this solution," BMW management board member Klaus Draeger said in the statement. "This fulfils the most important requirement for a successful future for the team.
"Our relationship with Peter Sauber has always been excellent and marked by absolute respect."
Sauber, who first entered Formula One with his team in 1993 and had retained a 20 percent stake after the 2005 takeover, said he was relieved.
"It means we can keep the Hinwil location and the majority of workplaces," he said.
"I am convinced that the new team has a very good future in Formula One, whose current transformation with new framework conditions will benefit the private teams.
"Our staff here are highly competent and motivated, and I look forward to taking on this new challenge together with them," added the cigar-smoking 66-year-old, who had intended to enjoy his retirement after BMW took over.
The team, who were led by Mario Theissen last season, have yet to name any drivers for 2010 while sponsorship deals have also been put on hold due to the uncertainty about their future.