Spanish-based journalist Graham Hunter told Sky Sports News that Real Madrid have agreed a deal with Lyon for the in-demand Karim Benzema, despite reports suggesting that Manchester United are close to sealing the striker's signature.
The Premier League champions have been in negotiations with Lyon over a deal for the 21-year-old French international as they look to bolster their squad following the departure of Cristiano Ronaldo to the Spanish giants for a world-record fee.
But reports in Spain and France claim that Real Madrid president Florentino Perez has agreed a deal with Lyon for the striker and Hunter believes that Los Blancos's superior spending power has blown Manchester United's bid out of the water.
"Certainly there is a deal agreed price wise between Lyon and Real Madrid. It is going to be €35million - which is in the region of £32million," said Hunter.
"My understanding is that Real Madrid have offered £6million more than Manchester United were willing to pay for Benzema and they will be suffering because there is no doubt that in the last 48 hours they have been negotiating not only with Lyon but with the player, and the player was perfectly happy to go to Old Trafford.
"Every player has a value, in the current times particularly. You have to be careful about how much you're willing to spend on a guy who is still going to grow. He is a France international who was French Ligue One top scorer in 2007/08, but he is still only 21."
Lyon have confirmed that they received a bid for the France international but refused to name the club and denied that a deal had already been reached with Real Madrid.
Lyon director Olivier Blanc told L'Equipe: "We certainly did receive an offer of a sum appreciably superior to the sum that has been mentioned, but nothing says that it comes from Real. There is no agreement with anyone."
But Hunter believes the foundations have been laid for Benzema's switch to the Bernabeu as Real Madrid continue to build a squad of Galacticos in a bid to wrestle back the Spanish title from arch-rivals Barcelona and mount a bid for the Champions League.
"Benzema is a guy Real Madrid have offered a contract for six years so when you look at the way in which the deals for Kaka, Ronaldo and now Benzema have been done you can see they are planning for a long future," said Hunter.
This is the third transfer tussle to emerge this summer between Manchester United and Real Madrid after Perez finally secured the transfer of Ronaldo and Sir Alex Ferguson pipped the Spanish side to the signing of Ecuador international Antonio Valencia.
With the Benzema saga yet to be concluded and both clubs expressing an interest in Bayern Munich's Franck Ribery, it is a battle set to continue throughout the summer.