Real Madrid announced on Thursday that it has reached a deal to sign Malaga midfielder Francisco "Isco" Alarcon, one of Europe's most prized young players.
Madrid club president Florentino Perez told Spanish national radio that "we have a deal with the club and we have a deal with the player."
Perez said Isco would need to pass a routine medical exam and that it was "probable he will be presented next week."
The 21-year-old Isco helped Malaga reach the Champions League quarterfinals last season and guided Spain to the under-21 European title this summer.
Since Malaga lured him away from Valencia in 2011, Isco quickly became a team leader with his passing, dribbling and goal scoring. He netted 12 goals in all competitions for the Costa del Sol side last season.
Isco will now have to compete for playing time with a star-studded group of attacking players that features Cristiano Ronaldo, Mesut Ozil, and Luka Modric.
Manchester City was reportedly also interested in drawing Isco away from Malaga, especially after hiring his former coach Manuel Pellegrini.
Madrid hired Carlo Ancelotti as manager on Wednesday to replace Jose Mourinho after he returned to Chelsea following a season without a major trophy.
The former PSG, Chelsea and AC Milan coach said at his presentation that Isco was a talented player.
"He is very good," said Ancelotti. "Spain's under-21 side has fantastic players, (but) he has the most quality of all of them. Isco can play for any club."
Isco is Madrid's second signing this offseason after it paid Bayer Leverkusen to recover right back Daniel Carvajal.
Isco is the last in a growing line of players which includes Santi Cazorla and Nacho Monreal that Malaga have sold over the past year since its Qatari owners drastically changed course after a spending spree to build a team that qualified for the Champions League for the first time in club history.