Merino, 21, who joined Newcastle on loan from the Bundesliga club in the summer, has signed a five-year contract.

He has played in all seven Premier League matches this season and won the club's Player of the Month award for August.

The Spain under-21 international told the official Newcastle website: "I'm really happy to be here for five more years, and I hope to keep playing for this club and to give good things to all the people and the club.

"I have been focused on football always, but it's good to know it [the transfer] is now official and people will know it."

Manager Rafa Benitez said Merino "has played very well since he joined us" and added: "He has a lot of quality on the ball and is keen to learn -- that is a crucial part of his future development.

"He has to keep working hard and playing well, and hopefully he can improve and enjoy playing here."