The Bosnian Forward Edin Dzeko, 23, has attracted interest from teams in Spain, Italy( AC Milan) and England, with United, Manchester City, Chelsea and Arsenal all linked with him in recent weeks.
But Wolfsburg striker had repeatedly hinted that his preferred destination, should he move from Germany, would be Serie A side AC Milan.
The striker scored 30 goals in 33 appearances to help Wolfsburg lift the Bundesliga title last season and has 11 already this campaign.
Edin Dzeko scored against Sir Alex Ferguson's side when the sides met in the Champions League earlier this season and Phelan has admitted the club have been looking at him since.
"I'm sure there are a number of teams looking at him. Are we one on them? We are looking at talent all of the time and we are in there with the rest of them,'' Phelan said.
"He showed his threat in the game at Old Trafford and he appeals because he is a tall, skilful boy and in some ways he is an ideal player for the English league.
"He has stature, his feet are good and he is producing some good performances. I am sure everybody has looked at him.''
