Harry Redknapp failed with a £15million summer offer for the forward but was set to re-enter the bidding, while the Reds have since joined the race for the Internacional hotshot after watching him closely.
AC Milan are also in the market for a new striker, but all three clubs look to have been trumped after Internacional president Giovanni Luiggi revealed a huge £34m bid had come in from Ukraine.
It has been rumoured that Shakhtar Donetsk, bankrolled by billionaire Rinat Akhmetov, are the mystery bidder. And Luiggi confirmed that any team in the hunt for Damiao would have to stump up a similar offer before being taken seriously.
'I have an offer of €40m from a team in the Ukrainian league,' said Luiggi.
Asked whether the bid had come from Shakhtar, he said: 'I cannot say. It is a delicate moment. I can only say he will not go to Milan for this reason.
'If Milan offered €40m we could talk about it, but there has been no contact. The only team that has shown real interest is from Ukraine.'?
Source: Daily Mail