The 26 year-old is determined to leave the Allianz Arena in search for regular football in order to be in Brazil's plans for their upcoming world cup campaign next year.
And now it seems he will stay in Germany and play for fellow competitors VFL Wolfsburg who are looking to build on their 11th place finish place of last season.
It is believed that the 20 million euro deal is all but completed with Arsenal to miss out on another transfer target.
The Gunners have already missed out on Gonzalo Higuain, Victor Wanyama, Steven Jovetic and they also look set to miss out on Luis Suarez who is unlikely to move away from Liverpool.