Real Madrid have outbid Arsenal for Penarol whizkid Federico Valverde.

The 16 year-old midfielder had successful trials with Arsenal in January and Radio Universal Montevideo says the Londoners have offered €3.5 million to sign the teen.

Real, meanwhile, have offered €9 million for Valverde, reports El Confidencial.

Penarol president Juan Pedro Damiani is reluctant to lose the youngster this summer, but is prepared to sell for the right price.

Real's offer, almost three times what is on the table from Arsenal, is tempting for Damiani.