Real Madrid have named Carlo Ancelotti as their new coach today, on a three-year contract with former France manager Laurent Blanc replacing the Italian at PSG on a two-year deal.

The developments will finally see Gonzalo Higuain depart the Bernabeu with Ancelotti expected to sanction the move to either Arsenal or Juventus shortly.

The Serie A champions have rivalled the Gunners for the signing of the Argentine international with both clubs said to have agreed personal terms with the player and lodged official bids recently.

Arsenal are prepared to pay a record-breaking transfer fee and make Higuain the club's best paid player to ensure they capture their first major summer transfer target.

He is expected to command wages of £125,000-a-week - taking him above current highest earners Jack Wilshere, Theo Walcott and Lukas Podolski.

Arsenal's previous record transfer fee was the £15m paid to Zenit St Petersburg for Andrey Arshavin in 2009.

Higuain has scored 107 La Liga goals for Real Madrid in six and a half seasons with only Lionel Messi and Cristiano Ronaldo scoring more than him in that period.