According to reporter Victor Gil, it would appear as if Real Madrid and Arsenal have come to an agreement to ship out Alvaro Morata to London in order to get some regular playing time which he isn't finding with his current club. The report is stating that the deal was brokered prior to the Champions League final and that it could be announced in the coming days. While the Morata-to-Arsenal rumors have been floating around for months and through a variety of sources (from Bleacher Report to the Daily Star to ESPN), nothing has been 100 percent confirmed yet. In fact, the recent hot rumors have him going somewhere in Italy, both as a sale/loan option at Inter as well as a throw-in for any kind of deal involving Paul Pogba or Arturo Vidal. Additionally, there have also been rumors of him joining Sociedad on a loan and even some reports linking him to German clubs.
This rumor states that there will be a two year repurchase window should Real Madrid look to bring him back, the same way they brought back Dani Carvajal. A full transfer would've cost Arsenal €25m but since this clause exists it only cost them €10m. In theory, this is a good move for both the player and the club. He would get more minutes at Arsenal than he is now since it appears to be easier to unseat Olivier Giroud for playing time than Karim Benzema. Additionally, he'd be exposed to a different playing style than what he's been accustomed to in Spain and he'll be learning under Arsene Wenger, the man who managed Thierry Henri, Dennis Bergkamp and Robin van Persie.
However, this does bring up questions for Real Madrid in the more immediate sense. Morata is the backup striker to Karim Benzema and while Benz has avoided injuries for the most part of the season, he wore down at the end and it was apparent that the club needs a solid #2 at the position. With Morata heading out, they need to find a matured backup who is content to be a rotation option for a year, maybe two, without wanting a long term deal so that the door remains open for Morata to return.
Ideally, this would be a repeat of the Carvajal situation where a young player goes abroad to finishing school and comes back as a better performer. Morata has shown glimpses of being a solid striker, maybe not elite but certainly solid enough to back up Benz, but he needs consistent minutes to iron out some concerns which were evident in the last few weeks of the season.