Bayern Munich chairman Karl-Heinz Rummenigge confirmed Thursday the club has agreed a transfer with Liverpool for Spain midfielder Thiago Alcantara.
"I can confirm that FC Bayern have finally agreed with Liverpool FC," Rummenigge told German daily Bild.
"It was Thiago's big wish to once more do something new before the end of his career."
It is understood Liverpool will pay an initial fee of £20 million ($26 million) for the player, who has one year remaining on his contract at European champions Bayern, with more to follow in add-ons.
Bayern head coach Hansi Flick congratulated Liverpool manager Jurgen Klopp on landing Alcantara, who he described as an "exceptional player".
"'Kloppo' is getting a top player and a great person," Flick said Thursday.
"It was very emotional today when he (Alcantara) said goodbye."
Thiago, 29, had a year left on his contract at Bayern and had stalled over signing an extension.
The Spain international joined Bayern from Barcelona in 2013 and played a key role in last month's Champions League final victory over Paris Saint-Germain.
It had been reported a potential move for Thiago was being held up by uncertainty over the future of Liverpool midfielder Georginio Wijnaldum.
The Dutchman, who is in the final year of his contract at Anfield, has been linked with Barcelona.
Liverpool, however, have decided to make their move for Thiago now with Manchester United also reportedly chasing the signature of the Spanish playmaker.
He would be Liverpool's second signing of the summer transfer window and a more significant acquisition than that of Greece left-back Kostas Tsimikas, who was bought to provide cover for Andy Robertson.