The 37-year-old Dixon is in his last season at Highbury after being offered an extended deal last season and Oleg Luzhny has failed to establish himself in the right back position as his replacement.
Gunners boss Arsene Wenger is looking to reshape his ageing defence and bring in some young blood as he rebuilds the side after a disappointing season last term, which ended again with no silverware.
The sale of versatile Argentinian defender Nelson Vivas has left The Gunners with very little cover in the full back area and Wenger is determined to bring in quality defenders to the club this season.
The Frenchman was credited with an interest in Internazionale's Javier Zanetti, but it seems that the Argentinian international ace has his heart set on move to Spain with Real Madrid his most likely destination.
Should Zanetti move to the Santiago Bernabeu it would push Geremi further down the pecking order and almost render him surplus to requirements.
The Cameroon international, who can also play further forward on the right, has found his chances of playing regular first-team football limited by the form of Michel Salgado.
The 22-year-old, who helped The Indomitable Lions win the Olympic title and African Nations Cup last year, has played sparingly for Real this season and he would favour a move where he would be guaranteed first-team action.
Arsenal first offered £5.8 million for the powerful defender with Madrid holding out for £7 million but they have now agreed a fee of £6.5 million for the highly-rated star.
Talks are set to continue with the player and his representatives with Arsenal hoping to tie up a deal and make Geremi their first big signing of the summer.
Chelsea are also reported to be interested in Geremi as they look for a possible replacement for Albert Ferrer, who has been linked with a return to Spain.
Blues boss Claudio Ranieri is determined to strengthen his squad for next season and he could challenge Arsenal for the African's signature.
