Birmingham have signed veteran striker Kevin Phillips on a free transfer from West Brom.
The 34-year-old former England international had been holding out for a two-year contract at the Hawthorns but Albion were only prepared to offer one year.
Phillips, who scored 46 goals in 81 appearances for Albion, has now opted to join Blues on a two-year contract.
He netted 24 goals in 38 appearances last season and was named West Brom's player of the year and included in the PFA Championship team of the year.
The Baggies revealed they did offer Phillips a two-year contract - but with the second dependent on appearances over the coming season.
He needed to feature in only 19 league games, including substitute appearances, to activate the second year.
Manager Tony Mowbray said: "We made Kevin a very substantial financial offer for the next two years but in my opinion the second year had to be earned.
"Kevin's advisors were adamant they wanted a straight two-year contract and, as that was the sticking point, I have no problem with the outcome.
"I am happy that as a club we made a fair and realistic offer to Kevin and I'm obviously disappointed he has chosen not to accept it. But I've had a couple of very amicable conversations with Kevin in the past two days.
"Now that he has made his decision, I would like to thank him for his goals and contribution over the past two seasons.
"He is a top professional and has been a pleasure to work with. We all wish him well."
Mowbray added: "Kevin was a big player for our club over the last two seasons but we should look forward to some new exciting players coming here. I remain very positive.
"This time last year we lost some very influential players but went on to win promotion and reach the FA Cup semi-finals."