The midfielder is the third arrival at the Etihad this summer after Erling Haaland and Stefan Ortega as Pep Guardiola brings in reinforcements ahead of City s Premier League title defence.
The next 48 hours could prove crucial as heading into the start of July there is the prospect of £390million being spent in a whole host of deals to really ignite this summer transfer window.
As well as Arsenal, the Brazilian has interest from Barcelona, his preferred club, Chelsea and Tottenham, who are also expected to bid this week, but the valuation is prohibitive.
Former Real Madrid midfielder, Rafael van der Vaart, has advised PSV Eindhoven's Cody Gakpo not to join the Los Blancos but to choose between Tottenham