The Uruguayan has returned to first-team training, after failing to force through a move to Arsenal and Liverpool manager Brendan Rodgers says the issue is now resolved.
“Yes,” Wenger told reporters when asked if a deal was not possible anymore. “Absolutely no chance of that.”
Wenger is still determined to bring in big names in the last 12 days of the transfer window and a move for Real Madrid’s Karim Benzema, is now on the cards.
“It is like a poker game,” he continued. “People hold their cards as long as possible and see what is happening out there. In the end, they go for decisions.
“First everybody goes on holiday and nobody wants to do anything. Then in many clubs there are manager changes. They need to know the squad before they make a decision. Many, many things but it is always like that.
“Quality-wise we don’t need anybody but number-wise we are short as I told you yesterday. We lost [Alex] Oxlade-Chamberlain, [Mikel] Arteta and [Abou] Diaby – three international midfielders. That is why we are short.
“We tried to bring one in but we are working on that. You have to understand there is still a long way to go. The transfer market starts for me now and a lot of activity will happen between now and September 2.
“From August 21 until September 2 you have 12 days, so a lot will happen. It starts now.”