The Bianconeri are thought to have made a bid of £11 million plus £6.6 million in bonuses, but the Bundesliga outfit want an offer worth £22 million including add ons. If the two talks are still at a standstill on Tuesday, then the Serie A side will pull out.
This could leave the way clear for the Premier League duo, with the Gunners most likely to take advantage. Arsene Wenger is interested in the 21-year-old after an injury hit campaign in which he managed two goals and one assist in 15 league appearances.
The North Londoners are likely to be keen on he youngster for his performances in 2012/13 campaign, in which he scored ten goals and got three assists in 30 top flight matches. The Germany international has failed to match those stats in the two seasons since, but is still young enough to live up to his potential.
However, it is debatable whether Arsenal need another attacking midfielder in a squad that already has Mesut Ozil, Alexis Sanchez, Santi Cazorla, Tomas Rosicky, Alex Oxlade-Chamberlain, and Aaron Ramsey.