The Brazilian looks set to be back in north London before the start of next season after Sao Paulo's president admits they won't pay the price required to keep the midfielder
Denilson, who signed for Arsenal back in 2006 for a fee of £3.6m, had found appearances hard to come by under Arsene Wenger following the emergence of teenage sensation Jack Wilshere - and the midfielder was subsequently loaned out to his former club Sao Paulo for the duration of the 2011-12 season.
However, with the Morumbi club's president, Juvenal Juvencio, refusing to pay the Gunner's asking price of £4.9m, it now seems likely that Denilson will return to the Emirates.
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"Denilson won't stay," Juvencio told UOL.
"Arsenal want €6million (£4.9million) for him, but we won't pay that so we expect him to leave soon."
Denilson was a key member of Sao Paulo's team last season, making 30 appearances, but Juvenico admitted that even an extension on his current loan deal would be difficult.
He added: "Of course we will try to get the loan deal extended for another year, but it won't be easy."