Palacios was on the verge of making a move to Real Madrid last summer before injury scuppered the deal. And following the return of Zinedine Zidane to the Bernabeu, Los Blancos pulled out of the deal for the 20-year-old. Arsenal are now one of the front-runners for the highly-rated youngster who has been included in Argentina’s final 23-man squad for the upcoming Copa America in Brazil. Despite his young age Palacios has nearly four years of experience in River Plate’s first-team after making his debut as a 16-year-old.

The midfielder’s progress has been carefully watched by several of Europe’s elite clubs but Arsenal have now emerged as the favourites to capture his signature, Argentinian radio station Radio Continental reports. It is believed Palacios has a release clause in his contract of just £18million, a fee that should fall into the Gunners' transfer budget even if they fail to qualify for the Champions League next season. Palacios’ agent, Renato Corsi, confirmed the box-to-box midfielder “is leaving in June” and has “clubs in England and Germany asking about him” during an interview on Radio Continental. The Argentine would be an ideal replacement for the outgoing Aaron Ramsey, who will be joining Juventus in the summer on a free transfer.

Arsenal boss Unai Emeryis looking for a replacement for Aaron Ramsey who will leave in the summer

Arsenal are favourites to sign River Plate midfielder Exequiel Palacios

The 28-year-old had an offer on the table from the Gunners last September but it was turned down by the Welshman with the club reportedly not willing to meet his wage demands. Instead Ramsey went on to sign a four-year deal with the Serie A champions and will now earn over £400,000-a-week when he arrives in Turin. Gunners boss Unai Emery struggled to fit Ramsey into his formation, with the player’s desire to play as an advanced central midfield position clashing with the Spaniard’s approach. Emery had hoped Denis Suarez would be a suitable replacement for Ramsey, but the midfielder, on loan from Barcelona, has failed to make an impact at the Emirates. The coach had worked with Suarez during his time at Sevilla but the club now have no intention of permanently signing the player who has only made six appearances off the bench, for a total of just 95 minutes.

Aaron Ramsey is set to make £400,000-a-week at Juventus

Exequiel Palacios made his River Plate debut as a 16-year-old