Sources: Arsenal in talks on Aouar with Lyon

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Arsenal and Lyon have continued talks for the transfer of French midfielder Houssem Aouar but no agreement has been reached, sources told ESPN on Tuesday.

Arsenal’s first offer of €35 million was rejected by Lyon on Friday but the two clubs are still in negotiations for the 22-year-old France under-21 international.

The French side value him at €60m but are ready to accept around €45m with bonuses. The London club are ready to increase their offer and are optimistic an agreement can be reached.

Lyon have agreed a deal with AC Milan to sign their Brazilian playmaker Lucas Paqueta for around €20m. Paqueta, 23, has been earmarked as being Aouar’s replacement if the Frenchman was to leave the club.

At the weekend, Lyon president Jean-Michel Aulas put pressure on Arsenal by stating that if a deal was not done by Friday for Aouar any another player, they would stay at the club this season.

Aouar is Arsenal manager Mikel Arteta’s priority this transfer window ahead of other targets such as Thomas Partey from Atletico Madrid, who has a release clause of €50m.