The West London club are believed to have offered £33 million for the 21-year old but the club are holding out for £44 million for his signature.
The Argentine international has played 78 times for Palermo since he joined in 2009 and is under contract until 2014. The club finished a disappointing 8th in this year’s Serie A and will not play in Europe next year.
Chelsea are not the only club reported to have a shown an interest in the promising midfielder with both Manchester sides, Barcelona, Real Madrid and AC Milan all linked with the player.
Nicknamed ‘El Flaco’ for his tall and skinny frame, the 6 ft 1in midfielder has won 8 caps for Argentina and was a part of Diego Maradonna’s squad at last Summer’s World Cup.