Liverpool will pay just £500,000 up front for Ben Davies of Preston, who have negotiated a 20% sell on clause for the left-footed defender.
The 25-year-old centre-back is undergoing a medical at Kirkby on Monday and is expected to put pen to paper this afternoon.
The Liverpool Echo report that Michael Edwards has agreed to pay £500,000 initially for Davies, with another £1.1m to come in add-ons, including an England international cap clause.
Davies, who was in the final six months of his contract, was expected to leave Deepdale in the summer.
Celtic were understood to have agreed a pre-contract with the player, while Sheffield United and Burnley were also keen.
North End were not keen on selling to a local rival, while it was thought Sheffield United’s style of play would not suit Davies.
Speaking after their 2-1 loss to St Mirren, Celtic boss Neil Lennon told the Daily Record: “Hopefully we can get it tied up before the deadline,” said Lennon. “We’d like it to happen but again, I can’t say for sure whether it’s going to happen or not.”
But Liverpool are already believed to have made contact with Preston and Davies.
The local paper claim Edwards made initial contact with PNE on Thursday before pushing through an agreement over the weekend.
Preston have negotiated a healthy sell-on, while the remainder of the other add-ons which will make the deal up to £2.1m revolve around appearances for Liverpool’s first team.
What will Davies bring Liverpool?
Sky Sports' Mark McAdam explains what Liverpool are getting in defender Ben Davies and says the transfer will 'bigger than any dream' the player had for the January window.
Van den Berg clause
The champions’ hand was forced over the last week after further injuries to Joel Matip and Fabinho. With Joe Gomez and Virgil van Dijk already long-term absentees, Klopp’s options were starting to become stretched to say the least.
Skipper Jordan Henderson has filled in at centre-back in last two games against Tottenham and West Ham. Nat Phillips replaced Matip at half time of the 3-1 win at Spurs last week and he started in the 3-1 win over West Ham.
As part of the Davies deal, Sepp van den Berg will go on loan to the Championship season.
The 19-year-old Dutch defender has played nine times in Premier League 2 this season, but has not made an appearance last season. He did play four times in the cups last season, but has been well down the pecking order this season.
Preston are understood to have the first option for another loan next season if the Dutchman starts a percentage or more of the Championship games he is available for.