Ilkay Gundogan
Gundogan rejects chance to end Manchester United speculationGetty

Arsenal are set to challenge Manchester United for the signing of Ilkay Gundogan after the midfielder confirmed that he will not extend his contract with Borussia Dortmund beyond 2016, writes The Telegraph.

Arsene Wenger is a huge fan of the midfielder and is looking to add a central midfielder in the summer to partner Francis Coquelin in midfield, so as to share the defensive duties and alleviate some pressure from the backline.

The Gunners have been in good shape since the turn of the year, conceding only nine goals in the year, while winning all their games except against Southampton and Tottenham in the league.

Gundogan is likely to be available for a fee in the range of £20m which is well inside Arsene Wenger's budget but he needs to fend off interest from Manchester United who are also keeping a close eye on the situation.

Louis van Gaal is expected to set on a spending spree in the summer to resurrect United as title challengers in the upcoming campaign and has already set aside £100m to splurge on Gareth Bale.

The 20-time Champions are also expected to outbid Arsenal in confirming personal terms with the player, with the Red Devils capable of paying Gundogan much higher than what the Gunners can put on the table.

However, Arsenal's German core which includes the likes of Mesut Ozil and Per Mertesacker can turn the tide in their favour. The Gunners are also looking at Morgan Schneiderlin as a possible back up option, after the Frenchman had a brilliant season with Southampton and has been among the standout players in the league.

Mikel Arteta and Mathieu Flamini are likely to make way for the midfielder, with both of their contracts expiring in the summer. Arteta was out for the major part of the season with a calf injury while Flamini was sidelined by the resurgence of Coquelin into the first team.