Liverpool are close to agreeing a fee with Bayern Munich for the transfer of Thiago Alcantara, the PA news agency understands.

The Premier League champions have now begun discussions with the Champions League winners after being heavily linked with the Spain playmaker throughout the summer.

It is understood the Reds would pay an initial fee of £20million for the midfielder, who has one year remaining on his contract at Bayern, with more to follow in add-ons.

Liverpool manager Jurgen Klopp had previously tried to play down the speculation.

Bayern manager Hansi Flick said at his press conference on Thursday: “Thiago is an exceptional player who spent seven hugely successful years here.

“He’s a wonderful person and an outstanding professional. It was very emotional today when he said goodbye to us all.”

Thiago would be Liverpool’s second addition of the summer after the signing of Greece left-back Kostas Tsimikas.

Thiago joined Bayern from Barca in 2013 and was in the side that won the Champions League last month.