Matija Nastasic will leave Man City to join Schalke in permanent deal
Schalke will make Manchester City defender Matija Nastasic a permanent signing at the end of the season.
The Serbia international, 21, joined the German side on loan in January with Schalke having the option to keep him.
They have now activated that option by offering the ex-Fiorentina player a four-year deal.
"I am proud and happy to remain," he said. "From day one, I was immediately a part of the team and I'd like to help the team achieve our future goals."
Nastasic joined City from Fiorentina in 2012 in a deal worth £13m plus Stefan Savic moving in the opposite direction.
He played in Tuesday's Champions League 4-3 victory at Real Madrid that saw the Germans edged out 5-4 on aggregate.
Nastasic, a product of Partizan Belgrade's academy, had a promising first season at City.
However, his second campaign was less successful as a knee injury cut short his season in February, although he finished with a Premier League winners' medal.
Nastasic made the last of his 51 appearances for the club in the Community Shield defeat to Arsenal in August.