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He was hampered by an Achilles injury for a large part of last season and didn't figure at all in the first team once Steve Bruce took over as manager at St. Andrew's.
So, the one-time Northern Ireland international will join the Saddlers on their pre-season tour of the West Country and is expected to play in their first game against Exeter City on Saturday.
"Danny is just the type of strong player we need in midfield and that about completes our signings for the time being," said Walsall manager Colin Lee.