Manchester United began their long-awaited overhaul on Thursday by signing the midfielder Ander Herrera for around £29m from Athletic Bilbao and resuming their pursuit of the Southampton left-back Luke Shaw, who is set to join for a £27m plus add-ons after passing a medical on Thursday night. Shaw will become Louis van Gaal’s second signing after Herrera bought himself out of his contract with Athletic Bilbao to break an impasse over his move.

United had hoped to tie up Shaw’s transfer before he left for the World Cup with England after lodging a £27m bid in May. Southampton had valued Shaw at £30m but it appears a compromise has been struck after the player flew back in with the England party this week.

The 18-year-old defender won his third cap while in Brazil, acquitting himself well in the dead rubber that was the goalless draw against Costa Rica and returning home before his new manager, who has taken Holland into the knockout stages.

Despite not turning 19 until 12 July, Shaw has already racked up 60 appearances in the Premier League. He will be competing with Patrice Evra for the left-back role at Old Trafford after the France international took up a one-year contract extension last month.

Last season’s back-up Alexander Büttner looks set to move to Dinamo Moscow, joining Rio Ferdinand and Nemanja Vidic in leaving as United look to restructure their once formidable defence.

Bilbao had announced earlier in the day that they had rejected a €36m (£28.85m) bid for Herrera from United but the 24-year-old’s offer of compensation was enough to put the move back on. United said he was joining on a four-year contract, with an option to extend for a further year.

“The Football League has certified Athletic Club that player Ander Herrera has fulfilled the requirements of the applicable regulations valid for unilateral termination of the employment contract that bound him to our club, by depositing today the amount of compensation established in the contract,” Athletic Bilbao said on their website.

David Moyes had attempted to sign Herrera last summer during his ill-fated spell as United manager but the negotiations collapsed after he was unwilling to meet Bilbao’s asking price.

Herrera told his new club’s website: “Signing for Manchester United is a dream come true. I have played at Old Trafford for Athletic in the Uefa Europa League and it was one of the highlights of my career so far. I have joined United to do all I can to help the team reach the club’s objectives.

“Having arrived on Tuesday, I’m excited to now be living in Manchester and I can’t wait for my first game in United’s famous red shirt. I will never forget my time with Athletic Club and I’d like to thank the fans and staff for all their support and, above all, wish all my fantastic former team-mates all the best for the future.”

Herrera should help fill the gap in central midfield that was left when first Roy Keane and then Paul Scholes gave in to the ravages of age. There will now be the question of who should play alongside him with Michael Carrick now 32, Tom Cleverly unable to hold down a place and Marouane Fellaini having flopped since his £27m move from Everton.

The United assistant manager, Ryan Giggs, said: “Ander is a fantastic young player, with great energy and creativity. We believe him to be one of the brightest young prospects in Spain and I am certain he will be a big hit with the United fans.”