Exclusive: Celtic are closing in on a £3.5m deal to sign the German internationalist, Alexander Madlung, from Wolfsburg.

Celtic are closing in on a £3.5m deal to sign the German internationalist, Alexander Madlung, from Wolfsburg.

The 26-year-old centre-back has been linked with Sunderland and West Bromwich Albion but The Herald understands discussions between the Clydesdale Bank Premier League champions and the Bundesliga club are under way.

Celtic value the 6ft 4in defender in the region of £2.5m, while Wolfsburg are holding out for a fee nearer £4m, but the Parkhead board are confident a compromise deal can be agreed and have acted quickly as the list of suitors grows.

Madlung is believed to be keen to join his countryman, Andreas Hinkel, at Celtic and the club's automatic entry into the Champions League group stages is a major advantage over Roy Keane's Sunderland and Tony Mowbray's newly promoted Barclays Premier League side.

Galatasaray and Olympiacos have also expressed interest but Gordon Strachan has elevated Madlung to the top of the list of signing priorities after failure to reach agreement with Auxerre for Gabriel Tamas, the Romanian internationalist.

Celtic did submit a £1.5m bid for Cardiff City's Dutch centre -back, Glenn Loovens, but the long-time Rangers target remains a fall-back option for the champions.

The Herald understands Celtic are continuing to monitor Shaun Maloney's situation at Aston Villa and may make an attempt to re-sign their former player before the transfer deadline. The forward is desperate to return home after falling out of Martin O'Neill's first-team plans but Villa, who signed Maloney for £1m in January 2007, are looking to recoup their outlay, including wages.

Celtic will not meet that fee and realise they are in a strong bargaining position with Maloney, who was criticised along with his agent, John Halliwell, during an acrimonious departure.

Peter Lawwell, the Celtic chief executive, is also resigned to offering a costly severance package to terminate Thomas Gravesen's contract. The Dane has been an expensive failure since his £2.3m transfer from Real Madrid. He is the highest earner at the club, on £40,000 per week, and sources in Denmark claim he is entitled to a £1m bonus if he fulfils the final year of his deal.

Celtic may have to offer as much as £1.5m to remove Gravesen from the wage bill, but will offer no such incentive to Bobo Balde. The Guinean rejected a £25,000 per week package to join Birmingham City and Celtic are prepared to keep him as cover for the final year of his deal.

Shunsuke Nakamura, meanwhile, is poised to make his comeback for Celtic against Dundee United on Sunday.

The Japanese playmaker, who had a hernia operation in Germany last month, returned to full training yesterday at Lennoxtown and is expected to take a place on the substitutes bench at Tannadice.

The news is a major boost to Strachan, who will have the inspirational midfielder back to full fitness for the first Old Firm game of the season, on August 31, and Celtic's Champions League campaign.

Nakamura aggravated the problem during Japan's World Cup qualification games this summer. He required painkilling medication to represent his country and was unable to join Celtic's pre-season tour of the Algarve.

The 28-year-old, who missed a third of last season with knee ligament and nerve problems, had struggled with groin, ankle and calf problems after a relentless two-year schedule of games for club and country. He was prescribed a three-week rest period in his homeland after World Cup qualification duty but it did not have the desired effect and prompted Celtic's medical staff to recommend surgery.

He has recovered within the expected three-week period and his return will present the manager with a welcome dilemma. Barry Robson has performed admirably on the wing in Nakamura's absence and scored the winning goal, from the penalty spot, against St Mirren in the opening match of Celtic's season on Sunday.

Robson will now compete for a central position alongside a rejuvenated Scott Brown and Paul Hartley, who has established himself as the first-choice holding midfielder ahead of Massimo Donati and Evander Sno.