LYON have reportedly rejected Arsenal's player-plus-cash offer including Matteo Guendouzi for Houssem Aouar.
Aouar, 22, is valued at £44million by the Ligue 1 side following his incredible spell of form.
According to L'Equipe, Arsenal recently contacted Lyon to put an offer on the table.
Mikel Arteta's side offered to include out-of-favour midfielder Guendouzi as part of the deal.
But the source states that the French club have rejected their proposal.
Despite turning down Arsenal's offer, Lyon have admitted Aouar could leave this summer.
Sporting director Juninho told RMC Sport: "Houssem Aouar? When you have great players in the squad, it is quite logical that other bigger teams with greater economic power come to seek the players.
"There is a risk of losing important players.
"If we lose important players, I have already spoken with the president, we will have the right to balance the workforce."
Arsenal are determined to get Guendouzi off the books this summer - but will demand £40million for him.
The Frenchman has been training away from the first-team after another bust-up with Arteta.
Guendouzi infuriated his boss when he was involved in a scuffle with Neal Maupay in the 2-1 defeat to Brighton.
And the pair reportedly locked horns in a mid-season training camp in Dubai.