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The Reds stole a march on Tottenham and Manchester United to agree a deal which will see them pay an initial £37.5million with a maximum of £12.5m in add-ons if the 25-year-old is hugely successful at the club.
Diaz was manager Jurgen Klopp’s first choice for a summer transfer but growing interest, specifically from United, forced them to move early.
As a result it is understood they will have people on the ground in Argentina when Diaz, who is set to play against Peru at home on Friday evening, arrives for Tuesday’s World Cup qualifier in order to expedite proceedings.
However, there still remain significant hurdles to overcome, with a medical still a logistical issue as they have to be granted access to the player in between the two internationals and in enough time to be able to complete a deal before Monday’s deadline.
Should the deal come off – and the club remain cautious about that prospect – it would be a huge coup for Julian Ward, who succeeds sporting director Michael Edwards in the summer, as this is the first transfer he has taken the lead on using Edwards’ previously implemented strategy.
Liverpool had to move earlier than anticipated after learning of United’s plans for Diaz.
It is believed the Red Devils’ interim manager Ralf Rangnick had expressed a significant interest in bringing the player to Old Trafford and that sparked their arch-rivals into action.
Tottenham were also in the running, and were prepared to come up with the finances and were understood to have opened talks, but the player made it known his preferred choice was Anfield.
The potential arrival of Diaz, who has scored 41 goals and provided 19 assists in 125 games for Porto after joining from Colombia’s Junior FC in the summer of 2019, will significantly freshen up a forward line of which Mohamed Salah, Roberto Firmino and Sadio Mane will all be 30 by the end of the season.
It does not immediately change the club’s stance on Takumi Minamino or Divock Origi, who have both attracted interest late in this window.
Liverpool have rejected initial approaches from Monaco and Leeds for Japan international Minamino, who has made 18 appearances this season, although only six of those have been starts and four came in the Carabao Cup.
There is no pressing desire to offload the 27-year-old, especially with Liverpool still in four competitions, and only a considerable offer could persuade them to sell a player they signed from RB Salzburg in January 2020 for £7.25million.
Atalanta are also understood to be considering striker Origi, the scorer of five goals in 11 appearances, as a serious option should their Newcastle-linked Colombia international Duvan Zapata move to the Premier League.