Real Madrid have agreed a deal to sign midfielder Mateo Kovacic from Inter Milan, the Spanish club have confirmed.
The Croatian had been a target for Liverpool, but has now agreed a six-year deal with the Spanish giants.
Stevan Jovetic has left Manchester City to join Inter Milan on an 18-month loan deal, with a view to a permanent move.
The Montenegrin forward struggle to become a first-team regular at City, playing in a variety of positions.
He has previously experience in Italy, having represent Fiorentina in Serie A.
Croatia playmaker Mateo Kovacic has ruled out a move to the Barclays Premier League this summer, instead expressing a wish to remain at Inter Milan.
The 21-year-old has been strongly linked with Liverpool, with reports in Italy claiming the Reds are willing to spend 30 million euros (#21m) on the player.
However, Kovacic, who signed a contract extension with Inter for another four seasons back in January, has no intention of leaving the San Siro any time soon.
"Inter have never said they want to sell me, never," Kovacic said to Italian sports newspaper Gazzetta dello Sport. "I want to stay here. I will not leave.
"That's what I wanted, that's what my renewal until 2019 shows, there will be a long relationship between myself and Inter."
Liverpool on Tuesday sold winger Raheem Sterling to Manchester City for £49m and have money to spend in the transfer market.
"Could I replace Sterling? We have two different roles," Kovacic said. "It's not for me to say whether there have been any offers from the Reds or not, hopefully that's down to my agent.
"That said, I reiterate that I want to stay here."
Inter Milan have won the race to sign France midfielder Geoffrey Kondogbia from Monaco.
The 22-year-old will undergo a medical in Milan on Monday after the Nerazzurri announced they had reached an agreement with the Ligue 1 side for Kondogbia's permanent transfer, with the fee reported to be 40million euros.
A statement from Inter read: "Contracts signed with Monaco for Geo Kondogbia.
"The Frenchman will undergo a medical in Italy on Monday."
Inter Milan are confident on completing a deal for Manchester City midfielder Yaya Toure, according to club vice-president Javier Zanetti.
The Ivorian has been heavily linked with a move to the Italian club, helped by the fact his former City boss is now in charged at Inter.
When asked about the ongoing negotiations, Zanetti said to Gazzetta dello Sport: "We are at the stage where we hope we can complete it.
"Yaya would give us that leap in quality."
Inter Milan sporting director Piero Ausilio has revealed that signing Yaya Toure from Manchester City is 'just a dream'.
The Ivory Coast midfielder is a player Inter boss Roberto Mancini knows well after coaching him from 2010 until 2013 at the Premier League club.
Toure is under contract with the Blues outfit until June 2017.
"For the time being it's just a dream," Ausilio said. "It's good to have them and cultivate them.
"But we are looking to prepare something serious and important for the future.
"We want to build something that becomes a reality.
"It could be that he (Toure) wants to play in a different league.
"But he is a Manchester City player, he is in a very strong club that has no intention to let go of a player of that calibre."
Inter Milan sporting director Piero Ausilio has revealed his club twice came close to signing Manchester City forward Stevan Jovetic last year.
The Nerazzurri were looking to strengthen their attacking line last summer and made an approach to acquire the Montenegro international in the hope of luring him back to Serie A.
"We were so close to Jovetic," Ausilio told Sky Italia. "Not just last summer but in January, too.
"We pushed hard to get him but then an injury to (Alvaro) Negredo and the wish of the player to remain at City made the negotiations very difficult."
Spanish forward Negredo, who is currently on loan at Valencia from City until the end of the season, broke his foot last summer during the pre-season with City.
"I honestly had great hope," Ausilio said. "Jovetic is a player that we still like a lot but there's a problem.
"He is a City player and it's a very rich club."
Nemanja Vidic won't be leaving Inter Milan, according to his agent, despite an average start to his time in Italy.
The Serbian has been linked with a move away from the San Siro, but looks set to stay to work under Roberto Mancini.
Asked if Vidic would stay at Inter, his agent Silvano Martina told Gazzetta dello Sport: "I think he should, yes, because he has another two years left on his contract. In fact, I want to reveal something.
"Last year he (Vidic) made a specific choice to come to Milan, even though Manchester United wanted to keep him and kept calling up to December."