Arsenal aim to seal a stunning £36m deal to take Schalke forward Julian Draxler to the Emirates, with the promising German star desperate for a move this month.
Sources in Germany claimed on Friday night that Arsenal had agreed a fee with Schalke and negotiations with the player had already begun, despite Wenger's repeated denials of any deal.
Arsenal representatives travelled to Germany this week in the hope that a deal would be struck for Draxler with the 20-year old now forcing the issue.
Arsene Wenger is prepared to wait until the summer to land Draxler if Schalke insist they will not let him go this January window, as he is nursing an injury.
Wenger believes he can convert attacking midfielder Draxler into an outright forward, similar to how he adapted Thierry Henry and Robin Van Persie.
Draxler has a release clause in his Schalke contract set at £27m that is effective from the summer, and with the club known to be in need of cash, Draxler's arrival in North London seems likely with Arsenal accelerating interest, fearing stiff competition in the summer.
A move would see Draxler become the second most expensive player in Arsenal's history after Wenger broke the Gunners' transfer record at the end of the summer window by splashing £42.5m for the services of Mesut Ozil from Real Madrid. Andriy Arshavin at £15m previously held the record.
Schalke are keen to re-sign Tottenham midfielder Lewis Holtby, but have so far been unable to match the London outfit's asking price.
Should Draxler join Arsenal, Schalke will make an immediate bid to take Holtby, who has grown unhappy at Spurs after failing to establish himself as a first0team regular, back to the Veltins-Arena.
Should Schalke hold out for a summer scramble for their German star, who has amassed 10 caps for the German senior national side, Wenger will consider short-term options to boost his strike-force, with the likes of Cristian Tello and Alvaro Morata being rumoured to interest the Frenchman.
Wenger rejected claims he was in Spain to watch Tello, who could be available for loan, score a hat-trick against Levante this week, despite Spanish sources still insisting he was there. Tello can play wide or through the middle.