The Magpies held talks with Everton over the past few days with the Toffees hopeful of agreeing a deal in the region of £60m for the 21-year-old.
However the valuation forced Newcastle to pursue other targets.
Gordon has made it clear his future is not at Goodison Park and missed three days training this week before he unexpectedly appeared at the club's Finch Farm complex on Friday.
It is now believed both clubs have agreed a £40m fee for the England Under-21 international, rising to £45m with add-ons, with the deal likely to be completed before Tuesday's deadline.
Gordon has been at Everton since 2012 and has risen through the ranks to make his first team debut in 2020, scoring seven goals in 65 appearences.
It is understood Sean Dyche, who is expected to replace Frank Lampard as Everton manager in the coming days, will receive some of the funds for new players as the club battles to avoid relegation.
