Arsenal have decided to end their interest in Alvaro Morata after Real Madrid slapped a £60million price tag on his head, according to The Mirror.
Juventus recently confirmed that Real Madrid have decided to activate a buy-back clause worth £25m for the striker and that intention was later confirmed in a statement on the Spanish club's official website.
Bianconeri general director Giuseppe Marotta said: "Real Madrid will exercise their right to repurchase. We expect their offer in writing in the coming day, then we'll see, but the number of possibilities that remain are few, and we will try to replace him with an equally good player."
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It is widely believed that Real Madrid intend to sell the 23-year-old on immediately in the hope of churning a significant profit. Indeed, Zinedine Zidane already has Karim Benzema at his disposal and Morata is unlikely to rejoin Los Blancos on the basis of being a benchwarmer.
And after he grabbed two Euro 2016 goals in Spain's recent 3-0 win over Turkey, Real Madrid are confident of getting as much as £60m for him, more than Angel di Maria was sold for in 2013.
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That demand has been enough to convince Arsene Wenger to draw a line under his pursuit of the striker, potentially leaving a straight race between Arsenal's Premier League rivals Manchester United and Chelsea.
It leaves the French manager more reliant than ever on Jamie Vardy agreeing to move to the Emirates. The Leicester striker is currently considering an offer from the Gunners but is believed to be leaning towards staying with the Premier League champions.
With Danny Welbeck likely to be out until the latter part of the campaign, Wenger has admitted that Arsenal are short up front but he is already facing up to the fact that his top two targets are out of reach.
Where will Morata go?
Currently, it is Antonio Conte's side who are believed to be leading the race. The Italian manager never crossed paths with Morata at Juventus but has heard enough from his friends in Turin to know he is worth a significant outlay.
Manchester United have been linked but Jose Mourinho's immediate priorities lie with tying up a deal for Zlatan Ibrahimovic. With Marcus Rashford also in the ranks, it seems a move to Old Trafford may be off the cards.
However, Real Madrid have already confirmed that Morata will join up with Zidane at the team's pre-season training camp. Should he impress, he could find himself with a prominent place in the first-team squad.