Arsenal have given up hope of signing Thomas Lemar despite making a late £90 million bid for the Monaco winger, meaning Alexis Sanchez is set to stay at the club, a club source has told ESPN FC.
The Gunners had been prepared to sell Sanchez to Manchester City for around £60m, but only if they could find a top-class replacement for the Chile international.
A source confirmed that Arsenal had made a club-record bid for Lemar but that a deal was now "very unlikely" to go through before the transfer window shuts at 11 p.m. BST.
Lemar is on international duty in Paris on Thursday evening, and was named in the starting lineup for France's World Cup qualifier against Netherlands, further limiting time to get a deal done.
Liverpool are also unlikely to succeed in their attempts to bring in Lemar before the transfer deadline, according to the Liverpool Echo.
Manager Arsene Wenger had insisted all summer that Sanchez would not be sold, but that stance had softened after Sunday's 4-0 loss to Liverpool, when the player's mindset and performance were widely questioned.
Wenger also sanctioned the £40m sale of Alex Oxlade-Chamberlain, with no replacement set to come in for the England international.
Also on Thursday, Lucas Perez secured a loan to his former club Deportivo La Coruna, leaving the only deal Arsenal still expects to complete before the window shuts is a loan away for Joel Campbell, who is still in recovery from a knee injury.
It makes for a frustrating finish to a transfer window that started in a very promising fashion for Arsenal with the signings of Sead Kolasinac and Alexandre Lacazette. The club insist they're happy to keep Sanchez but there have been fears that his attitude could have a negative impact on the squad after he made it clear he wants to leave.
Sanchez can now see out final year of his contract and leave on a free transfer next summer, if the Gunners do not accept a cut-price deal in January.