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The move is viewed a major coup over Chelsea, as the Southampton 18-year-old is considered one of the best young left-backs in the world.
David Moyes is largely responsible for laying the groundwork for the transfer.
Shaw would become the highest paid teenager in English football history.
The £100,000 a-week, five-year contract, on offer to Shaw is far greater than Chelsea are willing to pay and they have decided to pull out.
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