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Lewis Holtby is preparing for a new challenge © PA Photos

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Lewis Holtby is to leave German club Schalke on a free transfer at the end of this season, the club have announced.

Holtby, 22, had been considered one of the key players in Schalke's bid to build a strong team for the future, but Holtby now will leave the Royal Blues at the end of the season.

Holtby has been linked to several Premier League clubs, including Arsenal and Liverpool, and on Thursday local paper WAZ reported that Bayern Munich are considering signing him to then send him out on loan elsewhere.

"Midfielder Lewis Holtby told the club that he will not take on the submitted offer to prolong his contract ending on June 30th 2013, but moreover leave the club at the end of the season," a statement from Schalke read.

Holtby is the son of an English father but chose to represent Germany and is the captain of the Under-21 side.

He has yet to comment on his club future, but Schalke general manager Horst Heldt revealed his disappointment after failing to persuade him to sign up like Netherlands international Klass-Jan Huntelaar.

"We would have liked that Lewis sees his future at Schalke. But much like with Klaas-Jan he has taken a personal decision, which we respect," he said. "We are certain, he will give all he can until the last match day and will contribute his share to the success of our team."

With rumours growing about his future destination, Holtby's agent Markus Noack denied speculation that Bayern Munich had made contact.

"There is no interest from Bayern Munich in the services of Lewis Holtby," Noack told German newspaper TZ. "This is just pure speculation.

"Bayern Munich have not enquired about Lewis Holtby."

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