Liverpool signed Kabak on loan from Schalke in February to ease their injury crisis at the back and have an option to make the move permanent for £18m this summer.
However, Liverpool, who announced the signing of Ibrahima Konate from RB Leipzig on Friday, have decided not to trigger the clause and have told Kabak.
With the Reds rejecting the option to buy him, the Turkey international is now looking for another club in the Premier League and Newcastle, who were also keen on him in January, will be offered the chance to sign him.
However, Kabak’s wage demands could scupper a move to St James’ Park.
The central defender is said to be looking for an £80,000-a-week contract to return to the English top flight and it is making him an unattractive option to potential suitors.
Apart from Newcastle, Leicester City have also been credited with an interest in Kabak, but it remains to be seen if either club will be prepared to meet his wage demands.
The centre-back made 13 appearances across all competitions for Liverpool over the course of the season and helped the Reds to reach the Champions League.