The 23-year-old's deal expires in a few months meaning he could be lost for nothing if the Gunners do not tie him to a new deal.

Reports suggest Walcott is holding out for 100,000 pounds a week, but according to Wenger the two parties are only a matter of days away from striking an agreement.

"My optimism is at 99 percent now," Wenger said.

"In my experience of negotiations that when things go on for as long as they have then it's a bad sign.

"But in this case it's taken us some time to get where we want to get and it's still not finalised but hopefully it will be done by this weekend."

If Walcott refuses to sign he could be available for free in the English summer, making the need for reinforcements more immediate for Wenger.

The Gunners have been linked with a number of players including Crystal Palace's Wilfried Zaha and Napoli's Edinson Cavani, but Wenger insists nothing will be completed until late in the January window if at all.

"The prices always go up at the start of a transfer window and go down in the last week," he said.

"Sometimes they go up in the last week but most of the time they go down in the last week.

"Also we all know that 90 percent of the transfers happen in the last week if not the last 24 hours of the window."