Bayern Munich have accepted defeat in their efforts to sign Werder Bremen playmaker Diego.
Bayern had been hoping to keep the Brazil international in Germany, but he appears destined to be heading elsewhere.
Serie A giants Juventus are favourites to land his signature, with an agreement already believed to be in place.
That has forced Bayern out of the running, with the reigning Bundesliga champions disappointed at the manner in which they were treated during negotiations.
"We are out of the race, we are a reliable club," Bayern chairman Karl-Heinz Rummenigge told BILD.
"Everything in this case appears kind of strange to us.
"During a chat with (Bremen general manager) Klaus Allofs we discovered that there is already an agreement in place concerning a transfer to Juventus."
Diego's agent Giacomo Petralito has also confirmed that a deal has been agreed between his client and Juve.
"All parties have already signed an agreement," he said.
"Any club attempting to sign Diego now will be liable to prosecution and I regard Bayern Munich as reliable enough not to do so."