The England Under-21 striker, who checked out of Rovers after a disastrous year to rejoin the Saints in an exchange deal - the Norwegian international Egil Ostenstad makes the reverse journey - cost the club a record pounds 7.5m when he arrived at the start of last season. But his form and confidence dipped so badly that his rating went through the floor.
Southampton wanted pounds 2m for Ostenstad and got Davies in exchange. Rovers will eventually receive up to pounds 1.2m in extras for appearances. The 27- year-old Ostenstad has signed a five-year contract and will go into Rovers' squad for their home game against Barnsley on Saturday.
Davies scored just twice for Blackburn, both against Charlton at home in the Premiership and FA Cup, and must surely be ranked as one of the most expensive mistakes ever, having cost Rovers pounds 2.5m a goal.
The signing was part of the reason why Roy Hodgson lost his job - Davies did not manage a goal under his leadership. Hodgson's successor, Brian Kidd, was in danger of going down the same road as Davies failed to score in his two First Division starts this season.
Davies was still commuting from his family home in Sheffield, the sanctuary he fled to in his low spells at Southampton. His state of mind at Ewood Park showed through when he broke a curfew before a vital match with Manchester United, a foolish gesture that earned him a fine of around pounds 25,000.
Kidd had sympathy for Davies's plight and said: "When you look back at the 12 months he had, there was a lot of bad luck. The club has not had the best of times either. The lad just needs that wee bit of luck and I wish him well. He's young and has plenty of time to do well."
"At pounds 2m, Ostenstad certainly represents better value than Davies and it is to Kidd's credit that he has persuaded a player with proven international and Premiership experience to drop down a division. The Norwegian is also the first foreign player to arrive at Blackburn since the club's owner, Jack Walker, laid down a new transfer policy last year.
"I'm going to a much bigger club than where I was at," Ostenstad explained. "The potential at Blackburn is unbelievable. I will do my best to get them back to the Premiership - where they belong."
Kidd said: "I see Egil playing a major role here. His strength is running through and getting himself into one-to-one situations. His finishing is first class.
The signing will cast some doubt over the futures of two other Rovers strikers, Nathan Blake and Kevin Gallacher, as Kidd's revolution continues.
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