Porto have confirmed the permanent signing of Watford full-back Miguel Layun.

The Mexico international has spent the season on loan in Portugal and an option to make the move permanent this summer was in place.

Porto, who paid the Hornets a loan fee of €500,000, have opted to sign Layun for €6million in two instalments.

The Portuguese club released a statement which said: "The Mexican was on loan from Watford, but our club reached an agreement with the English club. If Layún was already a player in the style of Porto, now [he] will have [a] contract with Porto."

But there is speculation Layun could be sold on for a profit to Real Madrid this summer.

Watford have a 20 per cent sell-on clause if Layun is sold by Porto for a fee exceeding €6.5million.

Layun featured in 41 games for Porto scoring six goals as the side finished third in the Primeira Liga.

His final appearance of the season came on Sunday in the Portuguese Cup final where Porto were beaten 4-2 on penalties by Braga after a 2-2 draw.