Merino, 22, moved to St James' Park from Borussia Dortmund in 2017, and made 24 Premier League appearances in his debut season as the Magpies cemented their place in the English top flight.
The midfielder's talents have not gone unnoticed, and he is now set to line up for his fourth team in as many seasons with a switch back to La Liga.
Goal understands that Merino has agreed a five-year contract with the Basque side, and that negotiations have now opened with his club.
While no deal has yet been struck the two parties are expected to settle on a fee worth roughly €12m, while Merino holidays in Ibiza following a stay in New York during this summer break.
Meanwhile, Arsenal left-back Nacho Monreal is a further target for Real Sociedad, although their hopes of landing the Spain international are faint.
Monreal, like Merino a native of Pamplona and a graduate of Osasuna's youth academy, is believed to be happy with life in London after six years at the Gunners and is in no rush to find a new club.
With new Arsenal boss Unai Emery equally reluctant to sell, only strong pressure from the player himself would force the Gunners' hand, while no personal terms have been agreed with Monreal.