The Gunners' supremo recently admitted that he was an admirer of the England U21 international, who has made just four league appearances for the Cottagers, scoring an own goal against Chelsea at Stamford Bridge in December.
However, while the Frenchman was mulling a move for the former Maidstone stopper, Old Trafford adversary Sir Alex Ferguson was busy swooping in to snare his signature, with Smalling set to join the Red Devils at the end of the season.
Having missed out on Smalling, Arsenal were then dealt another defensive blow with Thomas Vermaelen sustaining an injury at Aston Villa on Wednesday that is expected to rule him out of Sunday's crunch clash with Manchester United.
And Wenger has admitted that a deal to bring Smalling to the Emirates Stadium was close to being completed, as well as wishing the 20-year-old good luck for the future with United.
“Manchester United got Smalling, I’m sorry. We were close to getting him as well," he said.
“I wish the player well, it is important that he is happy and I hope he makes a great career.”
Smalling, speaking to the Red Devils' official website, said the opportunity to work under the guidance of Ferguson was too good to turn down.
“My time at Fulham has been great and I have learned a lot about the game from Roy Hodgson and the coaching staff. But the chance of coming to the biggest club in the world is something I just couldn’t turn down," he said.
"I’m excited about working with Sir Alex and the fantastic players in the squad.
“I’ve played a few times in the Europa League this year, but the thought of making the step up to the Champions League next year is great. I can’t wait.”
