This story has been reproduced from today's media. It does not necessarily represent the position of Liverpool Football Club.
Schalke midfielder Lewis Holtby has decided against renewing his contract with the Bundesliga club, paving the way for a potential move to Liverpool in the summer.
The former Alemannia Aachen star's camp have been in negotiations with Schalke for several months but Goal.com can reveal that the two parties have failed to reach an agreement, with a switch away from the Veltins Arena now looking a certainty.
Goal.com exclusively revealed back in October that Liverpool had identified the 22-year-old Germany international as one of their primary transfer targets and Brendan Rodgers' side could now look to step up their interest in the player in the January transfer window.
Under the Bosman ruling, Holtby, whose current deal with the Gelsenkirchen outfit expires in the summer of 2013, would be free to negotiate a contract with potential suitors in the new year and Liverpool could look to pounce.
Schalke, who currently lie in seventh place in the Bundesliga table and face Galatasaray in the last 16 of the Champions League in February, tied down influential striker Klaas-Jan Huntelaar to a new contract on Sunday although appear to have lost the battle to keep another of their prized assets.
Jens Keller's side are expected to make an announcement on Holtby's future later on Thursday with the midfielder seemingly now set for the Premier League having made no secret of his desire to make the move to England in the past.