Gunners chief Edu is keen on the Spain Euros winner and has been in contact with La Real for the midfielder this summer.
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Sport says once Arsenal close a deal for Bologna defender Riccardo Calafiori, Edu will focus his energies on signing Merino.
Barcelona are also keen, but it's understood Arsenal boast greater spending power.
In London, there's a belief La Real will sell Merino for €25-30m.
