Arsene Wenger will turn his attention to Rennes midfielder Yann M'Vila after the Frenchman ruled out a move for Real Madrid's Esteban Granero.
Reports in Spain last week suggested Arsenal were on the verge of finalising a deal for the £10m-rated 24-year-old, who is expected to leave the Bernabeu in January.
Granero had been heavily linked with a £6m move to the Emirates in recent weeks as Wenger looks to bolster his injury-ravaged midfield.
With Jack Wilshire side-lined until December and Abou Diaby suffering yet another set-back in his recovery from a broken leg, the Arsenal boss had apparently identified Granero as one of his main January transfer targets.
However, the Mirror reports that Wenger has said a move for the midfielder is now unlikely, with Rennes' Yann M'Vila a more optimistic target.
Arsenal have been monitoring the 21-year-old defensive midfielder for over a year and Wenger has already had a bid of around £26m turned down in the summer following the departures of Cesc Fabregas and Samir Nasri.
M'Vila's Rennes teammate Kader Mangane believes the French international will leave the club in the summer transfer window.
"He might go to England but he also likes the Spanish league. I don't think he will leave in January but I think he will join Real Madrid or Arsenal next summer," Mangane told Goal.com.
"The top clubs are right to scout him as I see him with a big career in front of him. Yann has the potential to be one of the biggest players in the world."
Meanwhile, Wenger has acknowledged that Manchester City are the favourites for the Premier League title this season, saying Roberto Mancini's side could have the crown wrapped up by Christmas.
"Man City had some impressive away results, especially at Tottenham and Manchester United," Wenger told reporters.
"The potential is there, but we will see on a longer period. If they are still there with that difference in December, then you can say it'll be difficult to catch.
"It's too early to say we can still win the league but, if we win a few more games, why not?"