The Senegal international is allegedly on the verge of agreeing a temporary move to the Bundesliga side after finding his chances limited at Old Trafford
The Senegalese forward was spotted in the AWD-Arena stands in Hannover's 1-0 victory against Nurnberg on Friday and a loan move is now subject to the 24-year-old agreeing personal terms with the Bundesliga outfit and passing a medical.
"We have an agreement with Manchester United," Schmadtke told Sky Germany. "Now, the player must give us his okay."
Last month, United coach Sir Alex Ferguson admitted Diouf was a candidate for a loan spell.
The African striker has been unable to make his mark at Old Trafford since signing for the Red Devils in 2009, spending last season on loan at Blackburn, where he scored six goals in 30 appearances.