Red Devils had initially been confident of landing the German in January.
Premier League champions Manchester United have suffered a huge blow in their bid to sign in-demand Borussia Dortmund defensive midfield player Ilkay Gundogan when the winter transfer window opens again for business in the new year after it emerged that Spanish giants Real Madrid have already agreed personal terms with the player, according to reports in the Daily Mail.
The Red Devils have been keeping close tabs on the Germany international for some time now, with a view to possibly bringing the highly rated Gundogan to Old Trafford at the turn of the year.
Gundogan, 23, has been injured for the majority of this current campaign after suffering a back problem in August, restricting the holding midfield player to just the three appearances in total to date, only one of which has come in the Bundesliga.
However, with the German now well on the road to recovery finally, new United head coach David Moyes had been hoping to press ahead with plans to land the player in January, that is until news broke that los Blancos were now on the verge of sealing a £25 million move for Gundogan themselves next year.