The Gunners are believed to be close to securing a deal for the 27-year-old, with the La Liga side thought to be ready to sell the diminutive schemer.
A fee of around £16 million has been mooted and Arteta admitted he cannot hide the excitement of playing with his compatriot.
"I cannot talk about the actual situation but I can say that I know him as a player really well," the former Everton midfielder said.
"And he's a top, top player. He has got unbelievable quality and talent and that is all I can say."
Arsenal manager Arsene Wenger echoed the sentiments of Arteta and confirmed that he intends to spend more money this summer.
"I share the opinion of Mikel Arteta. [Santi] Cazorla is a great player," said Wenger.
"We bought Olivier Giroud and Lukas Podolski but we are not at the end of the transfers. We will still bring players in."
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