Stefano Pioli’s side have reportedly established contacts with Real Madrid over the signing of Isco.
However, the report also adds that Serie A club could withdraw from their pursuit due to the Spaniard’s high salary demands.
Although Los Blancos have given the nod for his transfer, Isco is said to have requested a salary of 9m euros per season, 2m euros more than he currently earns at the Spanish capital club.
Isco moved to Bernabeu in 2013 from Malaga and had been considered as one of the top players in Europe for a while.
However, he failed to nail down a place in the starting line-up under then-manager Santiago Solari, and it has been downhill since then.
Isco has been hardly impressive over the last few seasons, failing to replicate the extraordinary form he enjoyed at the start.
With Madrid set for a major overhaul under Carlo Ancelotti, there is a big chance for fringe players to be shown the exit doors.
Elsewhere, Milan remain in the hunt for an advanced playmaker to fill the void left by Calhanoglu and names like Philippe Coutinho, and Hakim Ziyech have been linked thus far.
Isco would be an ideal fit for Rossoneri, who will be playing in the Champions League next season. Whether he would lower his salary demands remains to be seen.