Despite saying they knew nothing about it, Manchester City did indeed know about Arsenal’s interest in Mikel Arteta and they DID have talks.

Of course they did.
Pep Guardiola has talked about Arteta leaving, he even confirmed Arteta was in talks with Arsenal. How could City, as they professed, seriously claim Arsenal had not been in touch?
As I wrote on Thursday, the whole thing smelt like City trying to make it look like they weren’t just stepping out of Arteta’s way to let him join Arsenal.

That’s basically what they are doing, to the surprise of many given we are in the middle of the season and they are 14 points behind Liverpool. Perhaps they know that jig is already up and are thinking ahead to next season, who knows.
According to the report in the Daily Mail’s Friday edition, “Arsenal did in fact hold talks with City regarding their intention to discuss the vacant manager’s role with Arteta. The former Arsenal midfielder is known to have kept manager Guardiola abreast of developments, while Arsenal’s head of football Raul Sanllehi has known City’s director of football Txiki Begiristain for two decades. Assertions that Arsenal were not in contact with City have confused Gunners officials.”

Arsenal are expected to unveil Arteta as their new head coach at a re-arranged press conference at some point on Friday.