The 26-year-old has completed a move to newly-promoted Fulham in a deal for around £19million, including add-ons.
As a client of agent Jorge Mendes – who Wolves have done numerous deals with over the years – the club were offered the chance to sign Palhinha and held talks over bringing him to Molineux.
Wolves considered the deal and it is understood they would have beaten Fulham to his signature if they pursued a transfer, but the hierarchy turned it down.
As a result, Palhinha has now moved to Premier League rivals Fulham, who will travel to Molineux on August 13 for Wolves’ first home game of the 2022/23 season.
The battle for Palhinha’s signature is understood to have been a one-horse race after Wolves turned their attentions elsewhere.
Wolves are still actively pursuing other midfield targets, in an area Bruno Lage is keen for reinforcements.
Of Wolves’ senior midfielders, Ruben Neves’ future is uncertain, Leander Dendoncker has just one year left on his deal with an option of a further year, while Joao Moutinho has today signed a new one-year deal with the club.
Wolves are in need of added quality as well as strength in depth as they explore a number of midfield targets.
Another factor is the style, with Palhinha’s defensive midfield role arguably the least pressing of the midfield options.
For some time Wolves have been in need of a ball-carrying midfielder who can help link and join attacks, in a position that would better suit Lage’s style of play.
With Neves still with the club, a more forward-thinking midfielder is likely higher up on the shopping list.
Supporters are understandably frustrated with the lack of signings so far, but patience may be needed as Wolves look to tie up deals for some of their ongoing targets.
Alongside the midfield, Wolves are expected to also be in the market for a striker and some defensive reinforcements after losing a handful of players.
At the back, Romain Saiss and Fernando Marcal were released at the end of their deals, while Ki-Jana Hoever and Ryan Giles were sent out on season-long loans.