The 23-year-old becomes Arsenal’s fifth centre-back that can also play as a full-back in their final deal of a busy summer transfer window.
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Hincapie joins on an initial loan from the Bundesliga club with an option to buy for a reported £45 million at the end of the season.
The Ecuador international played a key role for Bayer Leverkusen throughout his four seasons at the club, making 166 appearances and popping up with seven goals.