Arsenal have missed out on Sevilla's Julio Baptista after the 23-year-old confirmed his move to Real Madrid.
Sevilla said on their website they had accepted a fee of £13.8m (20m euros), rising to £16.9m (24.5m euros).
"The only logical decision was to sell him," Sevilla club president Jose Maria del Nido said.
Arsenal were close to agreeing a fee for the Brazilian striker, but he would rather stay in La Liga and has signed a five-year deal.
Baptista will have been resident in Spain for two years in August and can apply for citizenship then, although it is unlikely to be granted until 2006.
"It's an opportunity I can't let get away," the 23-year-old international was quoted as saying on Sevilla's website.
"I'm leaving a club that is big in every sense. One in which I became a true soccer player and where I made my name in football."
Earlier in the week, Sevilla president Jose Maria Del Nido had said the Gunners were close to agreeing a club record fee for the Brazilian.
Del Nido indicated that the offer was in excess of the £17.5m fee Arsenal paid for Jose Reyes in January 2004.
Arsenal boss Arsene Wenger, who had hinted the versatile Baptista could be a replacement for ex-skipper Patrick Vieira, played down the significance of missing out on his top target.
"I'm optimistic and I always think that with the one you miss, it might be good for the young players," he said.
"The good side is it gives a new chance to the players we have and the bad side of course is that he was one of, if not our main, target.
"But you have take that - that's competition."
Asked whether Arsenal might target another player before the transfer window closes at the end of August, Wenger said: "We are not really desperate.
"We wanted one player who could be a plus, a real plus, not just a good player. We wanted someone who could really give us more - or nobody."
Tottenham also showed an interest in Baptista, who started off as a midfielder but has been converted to a striker, with great success.
He scored 20 goals in 30 league games to help Sevilla finish sixth last season. He becomes Real's third signing of the close season after Uruguayan duo Pablo Garcia and Carlos Diogo.
His arrival could increase speculation about the future of England striker Michael Owen, who is already behind Ronaldo and Raul in the pecking order at the Bernabeu.