Brazilian midfielder Luiz Gustavo has joined Bundesliga side Wolfsburg from Bayern Munich.
The 26-year-old, who was a target of Arsenal, has signed a five-year deal with the German club.
Gustavo is primarily a defensive midfielder who can also play at centre-back.
He is competing with Tottenham Hotspur's Sandro for a spot in the Brazil side. Gustavo has 10 caps for Brazil.
Gustavo who has scored six goals in 100 appearances for Bayern Munich was not in Pep Guardiola's first team plans after the signings of Thiago Alcantara and Mario Gotze - so has moved to secure regular first-team football.
Gustavo has opted to remain in Germany ahead of joining Arsenal in the Premier League. Wolfsburg are not even in Europe which presents a strange move for Gustavo.
However, Gustavo has never played outside Germany which could have been a huge factor and the Brazilian may have wanted to play in a league he knew well to cement a place in the Brazil squad for World Cup 2014.
Despite this, Gustavo represents yet another player that Arsenal have missed out on this summer.
Arsenal have also missed out on Gonzalo Higuain who joined Napoli and are no close to securing other targets such as Luis Suarez or Wayne Rooney.
Arsenal are in dire need of a holding midfielder, especially after the news of Mikel Arteta's long-term injury.
Arteta played most of last season as a holding midfielder for Arsenal.
Arsenal fans are growing impatient with manager Arsene Wenger, who has yet to spend any of the finances he has been given this summer.
Missing out on Gustavo is another huge blow to Arsenal who have seen there rivals strengthen.
They have since identified Florian Thuavrin as an alternative after missing out on the Brazilian.
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