The north London duo have been heavily linked with the Villarreal man, who is rated as one of La Liga's best defenders.
His long-term future has been shrouded in doubt with his contract set to expire next year and an extension so far not forthcoming.
Both Premier League clubs had been given hope of tempting him into a switch to England but now it seems that he's set for Italy.
According to reports in Italy, the 26-year-old has already agreed personal terms with Milan ahead of a summer switch.
Now the two clubs are working on a transfer fee with the Serie A side ready to spend around £13m to land the player, who could leave Villarreal on a free in 14 months.