According to the Daily Mail, both Liverpool and United have tabled offers for the young talent. However, Chelsea are now said to be entering the fray, ready to outbid their rivals. Alao, who made his first-team debut this season, has been offered his first professional contract by Wednesday. Yet, he is hesitating over committing to Hillsborough, leaving the door open for other clubs.
While Liverpool's bid remains undisclosed, it's reported that United have put forward around £400,000 plus significant add-ons. Chelsea, on the other hand, are believed to be considering an offer of £600,000, along with substantial performance-related bonuses.
The youngster's decision will hinge on the career opportunities each interested club can provide. His rise at Wednesday comes amidst a period of instability for the club.
The Owls were placed into administration last October and have since been hit with an 18-point deduction by the EFL. Financial difficulties have resulted in unpaid wages and a reliance on youth players to fulfil their Championship fixtures.
A consortium spearheaded by James Bord is now the preferred bidder, bringing a takeover one step closer to fruition. The process is currently awaiting final approval.
Alao made his senior debut in the FA Cup third round tie against Brentford earlier this month, and was subsequently named in the starting line-up for the Championship fixture against Portsmouth last weekend.
Liverpool's transfer window has been relatively quiet thus far, with only defender Mor Talla Ndiaye joining the ranks. The 18-year-old is expected to link up with the club's U21 team as he continues his progression.
Speculation surrounds the futures of players such as Curtis Jones and Federico Chiesa. To date, the only confirmed departure is young talent James Norris, who transferred to Shelbourne on New Year's Day.