Arsenal target Luiz Gustavo has agreed to join Wolfsburg, according to Die Welt.
The Bayern Munich midfielder has become surplus to requirements under Pep Guardiola at the Allianz Arena, following the arrival of Thiago Alcantara from Barcelona.
The Gunners had reportedly tabled a £17 million bid for the Brazil international, while Gustavo himself said he "would like to play for them".
However, the German newspaper claim the 26-year-old has opted to remain in the Bundesliga and move to Wolfsburg.
Die Welt state that Gustavo is keen to leave Bayern to enhance his chances of featuring in next summer’s World Cup in his homeland.
Elsewhere, Swansea City chairman Huw Jenkins has spoken of his frustration at continued reports linking captain Ashley Williams with the Gunners.
Williams has long been touted to move to the Emirates Stadium, however, the Swans chief is adamant he is not going anywhere.
"Ash has grown with us. His performances and personality have grown with the club and he is a vital part of our team," Jenkins said. "He is a big part of our defence and now he is captain as well. He is a good leader to have at the club. As always, we want to keep those players and we hope he is with us for many years to come."
Despite the reported interest from Arsenal, Jenkins insists no approach has been made for the Wales international.
"We have had no phone calls about any of our players," he said. "And we hope that continues."