Arsenal and Chelsea interested in 25-year-old Brazilian forward with £70 million release clause: Reports

Chelsea are set to battle Arsenal again in the January transfer window, with both sides keen on signing Pepe from FC Porto, according to reports. The two London rivals are also competing for the signature of Shakhtar Donetsk star Mykhaylo Mudryk.

As per Record, FC Porto's Pepe is the latest name on the wish lists of Mikel Arteta and Graham Potter. The Brazilian star has a release clause of around €75 million but could be available for less than that, given his recent exclusion from the starting eleven.

Pepe has scored just two goals this season in his 14 appearances in the Primeira Liga. Despite appearing in all six matches, he failed to score or assist in the UEFA Champions League.

Arsenal are in the market for a winger, which has led to their interest in Mudryk. However, they are yet to agree a deal with the Ukrainian team for the 22-year-old.

Chelsea have also been linked with Mudryk and reportedly held talks with Shakhtar this week. They are ready to match the offer from the Gunners, but the North London side remain the favorites.

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Chelsea and Arsenal looking to bolster their squad for the second half of the season

Arsenal FC v Newcastle United - Premier League

Mikel Arteta has urged Arsenal's board to make moves in the January window as they cannot waste chances to improve the squad. He told the media earlier this week:

"We are really trying to improve the squad in every window. We're trying to do our best because we cannot waste any windows still with the squad and the numbers that we have. We will try."

Graham Potter is also keen on adding the right players during the window, but does not want to go overboard.

"I would say the January window isn't so straightforward to find solutions," said Potter on Friday. "From my perspective, the autumn fixture list was an extreme period – and I would not want to make too many drastic assessments [on players] based on that extreme period."

Speaking about his side, Potter added:

"The team, as I see it, hasn't functioned as maximally as I would have liked – and I think that it can do. I would say the job of the head coach is to focus on the players that are here and make them better. There's room for improvement there, for sure."