The England under-21 becomes Arsenal's third signing of the summer, joining Switzerland midfielder Granit Xhaka and Japan forward Takuma Asano.
Newcastle United midfielder Georginio Wijnaldum will undergo a medical on Friday ahead of his proposed move to Liverpool, a source has told ESPN FC.
Chinese group Fosun International has completed their £45 million takeover of Wolves, the club have announced.
Newcastle United have completed the signing of defender Grant Hanley from Championship rivals Blackburn Rovers for an undisclosed fee.
"Stiliyan is an inspiration to all of us. I have spoken to him and explained my thoughts and offered him the chance to remain at the club."
Liverpool have agreed a fee with Newcastle United for midfielder Georginio Wijnaldum, multiple sources have told ESPN FC.