The Gunners have regularly kept an eye on the Portuguese international, and he would have no doubt impressed with his most recent display, having been named man of the match in the 1-0 win.
Danilo has been at Porto for two and half seasons since his £4m from Maritimo in July 2015. The 26 year old was given his first senior cap for Portugal a few months before his transfer, in a friendly against Cape Verde, and he has gone on to play 27 times for his country.
With his club side this campaign, the midfielder has helped Porto maintain an unbeaten record through their first 18 leagues games, with 15 wins and three draws.
Amazingly, Sporting Lisbon are also unbeaten this season and are just one point behind in second place, while Benfica have dropped just 11 points this year, and are one point further back.