The north London side are keen to offload the centre-back but are believed to want a fee to complete the deal on the final day of the transfer window.
One source told ESPN “it is not a big number” with Arsenal thought to be prepared to do business for around €2-3million. Mustafi has started just six times in all competitions this season and is yet to play a single minute in the Premier League.
The 28-year-old is in the final six months of his deal and is ready to return to his homeland to resurrect his career having joined Arsenal from Valencia for £35m in 2016.
Schalke are keen on securing a replacement for Ozan Kabak, who is closing in on a switch to Liverpool. The reigning Premier League champions are expected to pay a loan fee — reportedly in the region of £2.5m — to sign Kabak until the end of the season with an option to buy in the summer.
Meanwhile, Arsenal boss Mikel Arteta has said he is hoping for no “bad surprises” as his side work on completing several late deals before Monday’s deadline.
Arsenal are in the market for a backup left-back with Crystal Palace‘s Patrick van Aanholt and Southampton‘s Ryan Bertrand under consideration as both players are out of contract at their respective clubs this summer.
The move will in part depend on offloading Ainsley Maitland-Niles, who is attracting interest on loan from Southampton and Leicester City while the club are also open to allowing Reiss Nelson and Joe Willock to depart if suitable agreements can be found.
Arteta was coy on the details at a Monday morning news conference.
“[Deadline day] is what it is, at least when you know what you want to do, what you want to achieve, it is easier,” he said. “Hopefully we won’t have any bad surprises and we can control what we want to do.”