Arsenal has been long-term admirers of Houssem Aouar and the Frenchman also wants a move to the Premier League side. However, he may have missed his chance to play for them.
The Gunners have been on the lookout for new midfielders in this transfer window, but he has fallen down their wishlist.
In recent weeks, they have focused on the return of Martin Odegaard as well as signing James Maddison or Manuel Locatelli.
The above targets remain priorities over a move for Aouar, according to Sun Sports.
The report claims that Arsenal is now so laid back in their plans for him that they will only make a loan offer for him if they fail in their bid to sign Odegaard or Maddison.
Arsenal was prepared to pay as much as £40million for his signature last summer, but Lyon wanted more money.
The report says his value has since dropped to £25million, yet Arsenal will not make a permanent move for him.
The report says the Gunners recognise they would need to replace Newcastle-bound Joe Willock and will try to bring Aouar in on loan for that purpose.
This bid might be rejected by Lyon, but he has just two seasons left on his current deal and could leave on a cheaper fee next summer.