Long time suitors Arsenal stunned Arsene Wenger has been stunned after Real Madrid slapped a £35million price tag on his top target Gonzalo Higuain.
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Arsenal thought they had secured the Argentina hitman after agreeing terms with his representatives.
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But the Gunners have yet to agree a fee with Spanish giants Real who will play hardball over the wantaway striker.
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Sources close to Higuain said he is now coming to terms with the possibility of staying in Madrid.
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Napoli have entered the race to sign Higuain and are willing to pay over £30m to replace Edinson Cavani who joined Paris Saint Germain for £54m this week.
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It means Arsenal now face a bidding war with the Italian outfit as Real are under no pressure to sell the player who has three years left on his contract.
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Real will ask top price for Higuain who expressed his desire to quit the Bernabeu at the end of last season, because they also need the funds for an £80m raid for Tottenham's Gareth Bale.