Chelsea have made a new offer for AC Milan striker Alexandre Pato.

The Daily Express says Chelsea tabled an improved £38million offer for Pato last night as they conceded defeat in their pursuit of his AC Milan team-mate Kaka.

Blues owner Roman Abramovich immediately acted to line up his fall-back option and Chelsea upped their initial offer of £31m for Pato to £38m, and offered the 19-year-old Brazilian, known as 'The Duck' a contract worth £5m a year.

Pato's agent, Gilmar Veloz, said last night that the teenager is keen to be reunited with new Chelsea manager Carlo Ancelotti.

Veloz said: "We are pleased about Chelsea's interest in Pato, but Milan have the final decision. The player has a contract with them, but if they came to agreement with Chelsea we would be open to start negotiations.

"At the moment I cannot give guarantees to the Milan fans that Pato is staying."