Mikel Arteta has agreed to become Arsenal's new manager and will sign a three-and-a-half-year deal as soon as the paperwork is finalised, sources have told ESPN.

The club is hoping to announce his appointment on Thursday and his first game will be the Premier League test against Everton on Saturday at Goodison Park, where he played between 2005 and 2011.

As reported on Monday, Arteta was the only candidate the club wanted to replace Unai Emery and take the place of interim head coach Freddie Ljungberg.

Talks between Arteta and his former club, whom he played for between 2011 and 2016, have gone on since Sunday and a final agreement was found on Wednesday.

His final interview with Josh Kroenke on Tuesday went very well. The 37-year-old Manchester City coach got reassurances on the direction of the club as well as a transfer budget.

It will be Arteta's his first experience as manager of a club's first team after three-and-a-half years working alongside Pep Guardiola at City.

Arteta, who will be under contract until June 2023, is now working on building his coaching staff. Ljungberg should be part of it, as should City coach Rodolfo Borrell, sources said.

Arteta will say farewell to City after their Carabao Cup game at Oxford United on Wednesday evening where he will be on the bench alongside Guardiola.

Former Barcelona and Bayern Munich boss Guardiola, who has been a friend of Arteta's since they were 15, has encouraged him to take the job.