Arsene Wenger has identified Pierre-Emerick Aubameyang as the perfect replacement for Alexis Sanchez, who is closing in on a move to Manchester United.
Tottenham were only willing to pay £35m for the Brazilian attacker, while Arsenal are prepared to pay £40m.
Sam Allardyce sees Theo Walcott playing "anywhere across the front three" at Everton if the club manage to beat Southampton to a deal for the Arsenal forward.
Alexis Sanchez, 29, is on the brink of leaving Arsenal after he was left out of the club's 2-1 defeat at Bournemouth on Sunday, 14 January.
Liverpool boss Jurgen Klopp reportedly believes the France international is overpriced at £90m and has turned his attention to other targets.
Manchester United's reported deal for Alexis Sanchez could result in Arsenal completing a triple deal for Henrikh Mkhitaryan, Malcom and Pierre-Emerick Aubameyang.
Armenia international Mkhitaryan, 28, has also been linked with moves to Inter Milan and former club Borussia Dortmund.
Manchester City are on the ascendancy and are more likely to win trophies than United as the power has shifted in Manchester.
Both Mesut Ozil and Alexis Sanchez are in the final six months of their respective contracts at the Emirates Stadium.
Arsenal are closing in on a deal for Bordeaux's Malcom which could be a major boost for Manchester United in their pursuit of Alexis Sanchez.
Theo Walcott has not started in the Premier League for Arsenal this season. He has been forced to settle for a place on the bench.
Manchester United have expressed interest in signing both of Arsenal's contract rebels Mesut Ozil and Alexis Sanchez.
Tafari Moore is likely to leave Arsenal on a permanent basis following the conclusion of his loan deal with Wycombe Wanderers.
Francis Coquelin joined Valencia in a permanent move on Thursday (11 January), but the midfielder regrets not leaving earlier.
Everton boss Sam Allardyce has confirmed negotiations with Arsenal to sign Theo Walcott during the current January transfer window.
Alexis Sanchez could yet remain at Arsenal, but Arsene Wenger is delighted at the prospect of a looming bidding war between Manchester United and Manchester City.
Everton and Southampton are interested in signing Theo Walcott from Arsenal in the January transfer window.
The young attacking midfielder first made his way into Arsenal in May 2009 and has gone from strength to strength over the years.
Alexis Sanchez is wanted by Manchester City and United with Arsenal ready to sanction a move if they secure a replacement.
Valencia have completed the signing of Francis Coquelin from Arsenal after beating off competition from West Ham and Crystal Palace.
Liverpool and Arsenal have been given fresh hope in their pursuit of Thomas Lemar with Leonardo Jardim suggesting that the players can leave Monaco this month.
Sanchez seems destined to leave in the coming weeks but it is not yet known who the Gunners are lining up to replace the Chilean.