The Italian club are ready to cash in on Holland striker Huntelaar after just a season at the San Siro and may yet lose unsettled Ronaldinho despite owner Silvio Berlusconi's insistence that the Brazilian would stay for the rest of his career.
Which way now? Babel has struggled to fit in at Liverpool
Babel can play either up front or on the wings and is a cheaper option to players admired by AC Milan such as Wolfsburg's Edin Dzeko and Sevilla striker Luis Fabiano.
Huntelaar is being offered to English clubs, but Milan would want Babel plus cash for the former Real Madrid man, which could put off Roy Hodgson.
Birmingham, who tried to sign Babel in January, again expressed an interest this summer, but Babel wanted to wait until he new his position in the thoughts of Liverpool's new manager.
His availability remains unclear, but Milan have been linked with an £8.5million move. Mediaset, a website owned by Berlusconi, says negotiations could be stepped up in the next few days.
A good bid could be hard to resist for a player who has struggled to make a significant impact since signing from Ajax for £11.5m three years ago.
Huntelaar has long been linked with Tottenham Hotspur, while Manchester United boss Sir Alex Ferguson was an admirer earlier in his career. The 26-year-old could be available for about £12.5m.
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