The former Juventus and Werder Bremen man has been the subject of much speculation over the last few weeks, with his contract at Wolfsburg set to expire in the summer. With a cut-price deal in the offing, teams started to sound out the possibility of a move for the Brazilian international, including another of his former sides, Atletico Madrid.
The interest from the Premier League certainly attracted Diego, who admitted that a move to the Emirates Stadium would be the perfect move for him at this stage of his career.
"It would be the ideal destination for me because their style suits my characteristics perfectly. Of course I would say 'yes' to Arsenal. Southampton have great organisation and discipline and big talents like Adam Lallana. But again there is nothing concrete. Playing in England is a very attractive proposition at the peak of my career but I’m focusing on helping Wolfsburg to get in the Champions League."
Despite those comments less than a month ago, it seems Diego is now set to return to Santos, who he won the league title with in 2002. Diego was part of the "Golden Generation" for Santos, alongside ex-Premier League stars Robinho and Elano, and could now fill the void that Neymar left as the team's talisman.
Lancenet report that Diego has agreed a three year deal with his former club, where he would earn almost £140,000 a week. It's likely that Arsenal would be unable to match such an offer, especially with star man Mesut Ozil reportedly earning a similar amount since his £42.4m move from Real Madrid.
Whilst it is always disappointing to miss out on a player you targeted, Arsenal shouldn't be too disheartened at missing out on Diego. He would mostly be playing second fiddle to Mesut Ozil anyway, and whilst Arsene Wenger needs strength in depth to make sure Arsenal challenge for the title, spending £140,000 a week on a depth player seems crazy.
Instead, expect Wenger to pursue a talented youngster who can develop behind Ozil - like Hakan Calhanoglu from Hamburg. It's a shame that we won't see Diego in the Premier League, but Arsenal will move on - and arguably be better for it.