Hiddink replaces Gadzhi Gadzhiyev, who was fired earlier this year.
He will earn a reported 8 million euros at the Russian side, who train in Moscow but play in the war torn region of Makhachkala.
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Chelsea have struggled to build momentum in the opening stages of the campaign and are currently looking over their shoulders at the relegation zone.
Who of Europe’s top strikers will move to England this summer?