Liverpool have signed defender Ben Davies from Preston in a £1.6m deal.
The Premier League champions, who agreed a transfer fee for Davies on Sunday, have sent 19-year-old centre-back Sepp van den Berg to Deepdale on loan until the end of the season as part of the deal.
Liverpool have paid £500,000 up front for Davies but Preston could receive add-ons totalling up to £1.1m, while the Championship club will also retain a 20 per cent sell-on clause on the defender.
On signing a long-term contract, Davies told Liverpoolfc.com: "It's a huge opportunity. Obviously it came as a bit of a surprise when it first came but once you start to get your head around it, the opportunity that is in front of me is incredible. I'd be silly to not make the most of it and learn off the players [at the club].
"I've never actually been to Anfield and I haven't had a look around yet. I had a quick look out and had a look at the pitch and it looks like a carpet, which obviously you'd expect.
"I haven't actually walked out of the tunnel yet, so I'm looking forward to that. Just to be in this kind of atmosphere is brilliant."
"I think it's probably clear that in a normal transfer window, without any issues, we would not look at Preston if there's a player for us or something like that," Jurgen Klopp said.
"But since we saw him and since our situation got clearer and clearer - the problems we had - when we saw him we got really excited about it and thought, 'Wow.'
"We see the quality and we see the potential as well because he's 25 and there's a lot to come for him. I love a lot about his play.
"He's a really good footballer, looks like a proper leader in this Preston team, good in challenges, looks football smart, can play different positions because he played in a back three and a back four and all these things. That makes him really interesting so I'm really looking forward to working with him."
Schalke defender Ozan Kabak is also closing in on a Deadline Day move to Anfield after the Reds agreed an initial loan deal with an option to buy for the Turkey international.
The 20-year-old has already undergone a medical in Germany and is expected to fly into Merseyside in the next few hours.
Schalke were unwilling to let Kabak leave without a replacement and have moved to secure Arsenal defender Shkodran Mustafi on a six-month deal.
Davies, 25, is Liverpool's first signing of the winter transfer window and arrives at Anfield amid the club's central defensive injury crisis.
Virgil van Dijk and Joe Gomez are long-term injury absentees, while Joel Matip sustained an ankle injury in the 3-1 Premier League win at Tottenham last week - a game Fabinho missed with a minor muscle injury.
Nathaniel Phillips, 23, replaced Matip on Thursday and started alongside Jordan Henderson in the 3-1 win at West Ham on Sunday, while 19-year-old Rhys Williams has also featured for Liverpool this season.
Celtic had reached a pre-contract agreement with Preston in January to sign Davies, who was in the last six months of his contract, in the summer.
Davies made 19 appearances in the Championship this season under Alex Neil, including the 1-0 defeat against Sheffield Wednesday on Saturday.
He is a product of Preston's academy and spent loan spells at York City, Tranmere Rovers, Southport, Newport County and Fleetwood Town, prior to breaking into the Lilywhites' first-team on a regular basis during the 2017/18 season.
One player who is not on the move, though, is Neco Williams after Liverpool rejected an approach from Southampton to sign the academy graduate on loan.
Wales international Williams is seen as important back-up to Trent Alexander-Arnold at right-back and has made four Premier League and three Champions League appearances this season.
Southampton have been trying hard to find another defender but have found dead-ends in their pursuits of Brandon Williams, Ainsley Maitland-Niles and Japhet Tanganga.
'Everything about deal makes sense for Liverpool'
Sky Sports News' Mark McAdam on Good Morning Transfers:
"Ben Davies was the subject of a £4m Bournemouth bid back in the summer that was rejected - Preston wanted £10m and there wasn't a second bid. Several clubs were interested in him from the Championship - a couple of Premier League clubs too - but he decided to stay. The money wasn't on the table, the club needed him.
"He's been a rock at the back, he's good in the air. He reads the game so well.
"Everything about this deal makes sense for Liverpool.
"Even if he isn't the player Liverpool want him or need him to be, is he going to leave them for less than £2m in the summer or in 18 months' time? They're going to make money on him and at 25, he's still got so much footballing development ahead of him.
"What an opportunity for him."
Sky Sports EFL pundit Keith Andrews:
"For where Liverpool are now I think it makes absolute sense. You can maybe liken it to something like the Odion Ighalo signing by Manchester United last year.
"It's a stop-gap to a point, but within that, you've got an opportunity as a player to stake a claim. It's a chance of a lifetime for Ben Davies.
"The only thing I would say is I think there is a snobbery in football that the big clubs don't look down that far, traditionally. Usually, Davies would have to go to a lower Premier League team and prove himself there, maybe akin to what James Tarkowski has done after his lower-league exploits.