The former Racing Santander forward has been linked with a number of clubs, whilst reports believed Real had reached an advanced stage of negotiations with Bundesliga side Wolfsburg, but for the player to turn down the move in favour of remaining in Spain.
This was thought earlier in the week likely to be through a possible switch to Villarreal, but Valencian rivals Los Che have beaten them to a deal, securing the player on a year-long loan for €2m, with an option to purchase for €12m at the end of that.
Valencia will also pick up Canales’ €1.5m wage, with a clause inserted in the deal so that he cannot play against Los Blancos next term. The deal comes in contrast to Jose Mourinho’s wishes to hold ownership of the youngster Real paid €5m for 18 months ago.
Canales is currently preparing for the Under-20 World Cup with Spain. His expected arrival at the Mestalla has immediately turned attention to growing reports of Juan Mata’s departure from the club, although the club are understood to be keen to keep hold of their playmaker.