Chelsea have agreed to buy midfielder Mateo Kovacic from Real Madrid for £40.3million.

The Blues are able to make the transfer despite being banned from signing players by Fifa for two windows due to breaching rules over the acquisition of foreign minors.

Kovacic spent last season on loan at Stamford Bridge so as long as the switch is finalised by June 30, the Croatia international won’t count as a new player because he is already registered as a member of Chelsea’s squad.

As Standard Sport reported last summer when they first acquired the 25-year-old, there was an option in place to negotiate a permanent switch.

Chelsea were having second thoughts about doing so with Kovacic struggling to make much of an impression last term, creating just two assists and failing to find the net.

However, Chelsea decided they had to act for two main reasons. Firstly, the transfer ban is likely to remain in place – despite the club appealing to the Court of Arbitration for Sport.

Then there is the fact that Ruben Loftus-Cheek is unlikely to return from a ruptured Achilles tendon until the end of the year and with Danny Drinkwater out of favour, Chelsea are lacking experienced options in that area of the pitch.

It has been reported in Spain that incoming manager Frank Lampard, who has been offered a three-year contract to replace Maurizio Sarri, has been consulted and approved the deal.

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Inter Milan, who Kovacic played for between 2013-15 before going to Real Madrid, had declared an interest with Madrid to buy him back.

But Kovacic made it clear that he preferred to stay at Chelsea and negotiations between the two clubs have stepped up over the past 24 hours.

Real Madrid wanted to use Kovacic as part of the deal that saw Eden Hazard leave Stamford Bridge for the Bernabeu earlier this month.

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Yet Chelsea director Marina Granovskaia insisted at the time that she would not entertain any player plus cash offers for the Belgian.

Hazard ended up going to the La Liga giants for a price that the west London club claim could go above £150m, although sources close to the player suggest the maximum to be earned is around £130m.