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The 24 year old centre-back is set to leave Birmingham City following their relegation from the Premiership and the Reds are reportedly one of a number of clubs interested in him.
Although Liverpool face competition for Dann from Arsenal, Sunderland and West Brom, they are the favourites to sign the defender as he was a season ticket holder at Anfield when he was younger.
Dann has been out since January with a hamstring injury and it was his absence that saw Birmingham dragged into an ultimately unsuccessful relegation battle.