Spaniard spent two years at the Santiago Bernabeu between 2010 and 2012.
Premier League outfit Everton are now in the driving seat to land Valencia midfielder Sergio Canales on a six-month loan deal with a view to a permanent move to Goodison Park for just £4m come the end of the season, according to reports in the Sunday Mirror.
SEE ALSO: Top 10 Players: Best Footballers In the World Ever
The former Spain Under-21 international has been made available on a short-term loan deal this month after new los Che head coach Juan Antonio Pizzi decided that Canales was not part of his immediate first-team plans going forward at the Mestalla.
And despite the likes of fellow La Liga sides Real Betis, Real Sociedad and Malaga all having expressed an interest in taking the 22-year-old on loan until the summer, it is understood that Canales currently has no interest in joining any of those teams.
All of which now means that the Merseyside giants have emerged as the favourites to sign the one-time Real Madrid attacking midfielder, initially on loan until the end of the campaign.