This story has been reproduced from today's media. It does not necessarily represent the position of Liverpool Football Club.
Arsenal and Liverpool have been given the green light to move in for Lewis Holtby after the Germany midfielder scrapped contract talks with Schalke.
After months of negotiations with Schalke's board, the 22-year old midfielder announced his intention to quit the Bundesliga club, in a development that will alert a host of admirers headed by the Barclays Premier League pair.
Both Arsene Wenger and his Liverpool counterpart Brendan Rodgers have expressed an interest in him and will be keener than ever, now he can be snapped up for a knockdown fee next month or for nothing at the end of the season.
Signed from Alemannia Aachen in 2009, Holtby has developed into one of Germany's most prominent young midfielders and was considered integral to Schalke's hopes of challenging the likes of Bayern Munich and Borussia Dortmund at the top of the Bundesliga.
They were hoping he would follow another Arsenal target, Holland striker Klaas Jan Huntelaar, in committing his future to the club, but board member Horst Heldt was forced to concede defeat.
'We had hoped Lewis saw his future at Schalke beyond the end of this season,' said Heldt. 'But he has made a personal decision that we respect.
'We are sure he will give everything between now and the end of the season.'
Arsenal and Liverpool must now decide whether to battle it out over personal terms in the summer or part with a cut-price fee now to land him in the January window.
Holtby's English father Chris is a lifelong Everton fan, and the Schalke playmaker recently admitted that he, too, has an allegiance to the Goodison Park club.
Though he chose to represent Germany at international level, rather than England, and has been capped three times since his debut against Azerbaijan 18 months ago, he has made no secret of his wish to play in the Premier League.