Arsenal boss Arsene Wenger wants £8m-rated Blaise Matuidi to bolster his midfield.
Gunners scout Gilles Grimandi watched the France Under-21 midfielder playing for Saint-Etienne against Monaco last weekend, reports the Sun.
Wenger made an initial approach for Matuidi, aged 21, in the summer but St Etienne refused to open talks.
Arsenal are set to make a fresh bid after Matuidi turned down the offer of an improved contract, which still has more than three years to run.
Grimandi has also been monitoring Matuidi's team-mate Mahamadou Dabo. The full-back is available for around £3m.