Cazorla came close to joining the Gunners last summer before being financially outmuscled by Malaga for the 27-year-old’s services.
Arsenal boss Arsene Wenger  has remained keen on signing the player and is hopeful that an offer of 15.6 million pounds ($24.2 million) will be enough to secure the club’s third transfer of the summer.
The Guardian newspaper reports that negotiations have already taken place between the clubs, with Malaga’s worrying financial situation meaning that a deal is likely to be completed.
The Spanish club could be relegated unless they pay their outstanding debts, which means any transfer fee is unlikely to come close to Cazorla’s 45 million euro buyout fee.
Cazorla’s desire to leave comes after his wages went unpaid last season, with the player’s relationship with the club reportedly having been irreparably damaged as a result.
Malaga are likely to sanction a move unless their Qatari backed owners inject more capitol into the club.
If their debts are not paid by July 31 the club will be relegated to the Spanish second division, and will lose their Uefa license as well as the right to participate in the Champions League.
Arsenal’s summer has been overshadowed by the future of their captain Robin van Persie, after the forward announced that he had no intention of signing an extension to his current deal.
A host of clubs have since been linked with the player, with Juventus emerging as the most likely destination for the Holland international.
Juventus had an initial offer of 10 million pounds rejected by Arsenal, but The Telegraph reports that the two clubs remain in talks regarding a transfer.
The current situation is likely to force further activity from Manchester United and Manchester City, both of whom hope to announce the signing prior to the beginning of the Premier League campaign.
Should a move to Italy fail to materialize, United are understood to be the Dutchman’s preferred destination, but manager Sir Alex Ferguson is known to be reluctant to be drawn into a bidding war with City for a player approaching 29 and with just a year remaining on his contract.
City boss Roberto Mancini has been told by the club’s hierarchy that he must reduce the club’s wage bill and move on unwanted players before making an offer for van Persie.
Meanwhile, Arsenal have been buoyed by the decision of French defender Laurent Koscielny to sign a new long-term contract with the club.
The 26-year-old has become one of the Premier League’s most improved players since joining from Lorient two years ago.
“I’m delighted to have reached agreement with the club,” Koscielny said. “I have had a fantastic time here and look forward to an exciting future with Arsenal.”
Everton’s Australian midfielder Tim Cahill has agreed to a switch to the New York Red Bulls, with the two clubs having settled on a fee in the region of 1 million pounds for the 32-year-old.
Cahill’s decision to leave marks the end of an eight-year spell with the Toffees, during which the midfielder became a fan’s favorite at the Liverpool club.
The player signed a four-year contract with the club as recently as May 2010, but has struggled to find form after scoring just three goals last season.
A number of Premier League clubs are eyeing up former Liverpool winger Ryan Babel after the Hoffenheim midfielder was told he can quit the German club this summer.
Tottenham, Fulham, Newcastle and Swansea are believed to be in the running to sign Babel, who signed for Hoffenheim for 8 million pounds in 2011.
Since moving to Germany, the Dutch winger has failed to impress, scoring just six goals during his time in the Bundesliga.
British radio station talkSport have reported that the German club are willing to take a hit on the figure they paid Liverpool, with the club reportedly willing to listen to offers in the region of 3 million pounds.
Babel is said to be desperate to return to the Premier League, and is said to be willing to take a hit on his 50,000-a-week wages to push through a deal.
Liverpool have focused their attentions on securing the services of Swansea’s 23-year-old Welsh international Joe Allen, and have been quoted a figure in the region of 15 million pounds by the Welsh club.
The eventual fee is likely to be significantly less given the player’s readiness to move to Anfield, with Reds boss Brendan Rodgers confident of landing the midfielder from his former club.
The Merseyside outfit are expected to test Swansea’s resolve with a 10 million pound bid in the coming days.
A deal is unlikely to be completed before the conclusion of the Olympics, with Allen likely to be a key part of the Team GB side competing for gold.