Real Madrid are prepared to sell Karim Benzema in the summer but won't part with him for less than £40m, reports the Daily Mail.
The French striker has had a significantly improved season under Carlo Ancelotti than he did under Jose Mourinho, but Real Madrid are still hoping for an upgrade in the summer.
Florentino Perez is looking to sign either Luis Suarez or Sergio Aguero but must first sell Benzema to generate funds.
Premier League trio Arsenal, Manchester United and Chelsea are all keeping tabs on the 26-year-old but face an uphill battle to convince Real Madrid to lower their asking price.
Real chiefs believe Benzema is worth as much as Mesut Ozil, who was sold to Arsenal last summer for £42.4m. They'll accept £40m, but no less.
Such a fee would be a risk for a player who has experienced indifferent spells of form throughout his time at the Bernabeu. However, desperation from the Premier League elite to sign a world-class striker could force their hands.
Arsenal boss Arsene Wenger is looking to add a world-class striker to his squad this summer as the Gunners have clearly struggled with just Olivier Giroud up front. Nicklas Bendtner and Yaya Sanogo have failed to support Giroud and Wenger has always been a fan of Benzema.
Wenger is believed to have as much as £70m to spend this summer, meaning a £40m fee would still leave plenty to strengthen in other areas.
However. Arsenal must first beat Manchester United, who, although without a manager, are pushing forward with plans to spend up to £200m this summer. Louis van Gaal looks set to become the new manager and Old Trafford officials are already working on transfers upon his request.
Chelsea manager Jose Mourinho is already in talks to sign Diego Costa, but he is set to sell Fernando Torres, Demba Ba and Romelu Lukaku in the summer and may be tempted to bring the player he managed last season to Stamford Bridge.