The Nigerian, 24, is expected to undergo a medical on Wednesday prior to agreeing a four and a half year contract, says the Daily Mail.
Watford had initially played down links with the former Gent flyer when he missed training amid talk of a pending bid last week. However, negotiations have kicked on and a deal is close to conclusion.
Watford are offering £3.5m to sign Kalu.
The Nigeria international, who has 13 caps and two goals for his country, will be Watford's fourth signing of the January transfer window after defenders Samir, Hassane Kamara and midfielder Edo Kayembe.
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