Ilkay Gundogan
Ilkay Gundogan has not played for Borussia Dortmund since August 2013.Reuters

Manchester United were handed a severe blow in their pursuit of Ilkay Gundogan after Borussia Dortmund confirmed that the midfielder signed a new contract.

The Red Devils were keen on signing the German international last summer but failed in their attempts to strike a deal with the Bundesliga outfit.

United manager David Moyes, however, was reportedly keen on signing the Dortmund star at the end of the season hoping to send Shinji Kagawa back to Jurgen Klopp's side as a part of player-plus-cash exchange deal.

About Gundogan's new deal, the statement on Dortmund's official website read, "Ilkay Gündogan has extended his contract at eight-time German champions Borussia Dortmund until 30 June, 2016."

"The midfielder was in the last season one of the most influential figures in BVB not only in the Bundesliga, but also on the way to the Champions League final at Wembley Stadium."

Gundogan's initial contract with the Bundesliga outfit was due to end at the end of next season. The reigning Premier League champions were hopeful of landing the player for a lesser price during the upcoming transfer window.

However, Dortmund have successfully managed to extend their star midfielder's stay at Signal Iduna Park for an additional year. The German international too expressed his happiness to continue playing for the Ruhr based club, hopeful of making a comeback next season.

"I am very grateful that my club gives me the opportunity to continue to be part of this special team and this very special environment. I will do everything to help my colleagues again soon and can go very optimistic about the coming weeks and months." Gundogan said.

The 23-year-old has made only three appearances for his current employers this season and has not played since August due to his niggling back injury.

Dortmund's Sporting Director Michael Zorc too reiterated his dejlight at securing the future of their star midfielder for one more season.

"We are very pleased with this deal against the backdrop of injury-related special situation and hope that Ilkay will contribute its full potential from the coming season for BVB," Zorc explained.