Bundesliga side Wolfsburg has agreed in principle to loan Brazilian midfielder Diego to Atletico Madrid for the 2011-12 season, according to reports out of Spain.

Atletico Madrid's manager and sporting director, Clemente Villaverde and Jose Luis Perez, returned from Germany on after talks with Wolfsburg officials sealed the midfielder's move to Madrid.

With the signing of Diego, 'Los Colchoneros' are set to close their summer spending spree. The Brazilian midfielder looks to reinforce Atletico's attack and will have to earn a place in the starting lineup against the likes of Tiago Mendes and Jose Antonio Reyes.

Diego began his professional career at Santos, where he excelled with fellow Brazilian international and AC Milan winger Robinho. After a disappointing two-year stint with FC Porto, Diego signed with Werder in 2006, helping Bremen to a second place finish in 2007-08.

In the summer of 2009, Diego agreed to leave Bremen for Juventus on a €24.5 million transfer, where the attacker struggled to carry over his form from the Bundesliga. One year later, Diego was back in Germany, having agreed to a move to Wolfsburg.

Atletico Madrid is scheduled to visit Valencia on Saturday.