Arsenal have responded to Manchester City’s interest in Declan Rice by submitting a bid worth £105m for the West Ham midfielder. However the bid is yet to be accepted by West Ham, even though it would set a record for a British player. They are unhappy with the payment structure proposed and, while they have not rejected the offer, talks between the clubs are ongoing. West Ham have been holding out for £100m and are expecting City, who have had a £90m bid rejected, to come in with a new offer on Wednesday. One source suggested Arsenal may need to raise their offer to £110m to see off City. The current proposal is broken down in a guaranteed payment of £100m plus £5m in add-ons. Rice’s preference has been to remain in London and join Arsenal, but City’s decision to enter the race has complicated the matter. Pep Guardiola wants Rice as a replacement for Ilkay Gündogan, who has joined Barcelona. West Ham’s decision to reject City’s opening offer was followed by sources saying that two higher offers had already been lodged verbally on Tuesday morning. That was followed by Arsenal submitting an official bid late on Tuesday night. It is likely that the other verbal bid has come from City. Manchester United are monitoring the situation but are seen as outsiders. Chelsea, who have targeted Rice in previous years, have not submitted an offer. Rice is Mikel Arteta’s top target and Arsenal have gone to great lengths to woo the West Ham captain. There is mutual admiration between Rice and Arteta. Arsenal’s manager envisages pairing the 24-year-old in midfield with Kai Havertz, who is due to join from Chelsea for £65m. Havertz has played as a No 9 for Chelsea but wants to operate in a deeper role. While still pursuing Rice, City confirmed the signing of Mateo Kovacic from Chelsea on a four-year deal for an initial £25m. The Croatia midfielder is City’s first signing of the summer and his arrival compensates for the departure of Gündogan, who joined Barcelona left on Monday after seven years at the club. Kovacic said: “This is a brilliant move for me and I cannot wait to get started with City. Anyone who has watched this team under Pep knows how good they are. For me, they are the best in the world. The trophies they have won are clear for all to see, but they are also the best footballing side out there. To be joining this squad really is a dream for any footballer.”