Rafa Benitez's promoted side are ninth in the table and travel to Southampton, three places below them, on Sunday.
Many Magpies fans have reacted to the news with delight, as they see the 21-year-old as an important player for Benitez - also that their club are spending money and supporting their manager in the transfer market.
Given his burgeoning talent, Newcastle have wasted little time in agreeing a permanent deal for Merino, who has put pen to paper on a contract that will run until 2022.
"I'm really happy to be here and for this part of the contract to finally be official", Merino told the club's official website. "I'm focussed on my displays and improving myself, and I'm really happy to have signed this contract".
Newcastle now sit ninth in the league and are looking a stronger unit than many expected, with Merino's calming influence in the middle of the park a key factor.