LIVERPOOL have agreed a £60million deal with Southampton to sign Romeo Lavia - but rivals Chelsea remain in talks with the Saints.
The Blues were close to agreeing a £55m package with the Championship club on Friday, but crucially have not sealed any deal with the South Coast side.
Lavia is understood to prefer a move to Stamford Bridge but would be more than happy to join Jurgen Klopp's Reds this summer.
The deal plays into an incredible tussle between the two clubs over Brighton's Moises Caicedo.
Chelsea will smash the British transfer record with a £115m deal for the Ecuador midfielder - just days after Liverpool agreed a £111m package with Brighton.
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Both clubs are desperate to bolster their midfields this summer.
Chelsea have sold Mason Mount, N'Golo Kante, Mateo Kovacic and Ruben Loftus-Cheek while Klopp has lost James Milner, Jordan Henderson and Fabinho.
Speaking after the 1-1 draw with Liverpool on Sunday, Pochettino said: "We need to improve the squad, yes.
"But that is not new. We are working very hard, I am so happy in the way that we are working with Laurence and Paul and the owners.
"For sure we are going to improve the squad. It is about finding the right profile, the right player to create a combination maybe where we are more solid."
Lavia made 29 Premier League appearances for Saints last term following his move from Manchester City.
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He was an unused substitute in their Championship season opener against Sheffield Wednesday on August 4 and has not featured since.
Klopp fielded an extremely attack-minded midfield trio comprising of Alexis Mac Allister, Dominik Szoboszlai and Cody Gakpo for the Reds' 1-1 draw at Chelsea yesterday.
Liverpool have lost midfielders Fabinho, Jordan Henderson and James Milner this summer.
Curtis Jones and Harvey Elliott both featured from the bench at Stamford Bridge.
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Prior to potential deals for Caicedo and Lavia, the Blues had already spent around £180m this summer on Christopher Nkunku, Axel Disasi, Nicolas Jackson, Lesley Ugochukwu, Robert Sanchez and Angelo.
Liverpool, meanwhile, have spent a shade under £100m on Szoboszlai and Mac Allister.
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