Former Real Madrid defender Pepe has reportedly turned down the chance to join Arsenal in favour of linking up with Thierry Henry at Monaco.
Pepe is currently a free agent after being released by Besiktas in December, and he was initially expected to return to his homeland with league leaders Porto.
However, L'Equipe reports that Pepe is now on the verge of completing a deal to join Monaco, where former Arsenal and Barcelona forward Henry is currently the manager.
The report also claims that Arsenal made a late attempt to hijack the deal, only to be rejected by the Euro 2016 winner.
The Gunners are in the market for defensive reinforcements this month following a string of injuries so far this term, including a season-ending one for Rob Holding.
Monaco, meanwhile, are also thought to be on the verge of completing a deal for Chelsea and former Arsenal midfielder Cesc Fabregas as Henry attempts to drag the club away from relegation trouble in Ligue 1.