The Premier League side have already seen a bid rejected for the striker.
Lyon are planning to step-up their efforts to keep hold of Alexandre Lacazette by offering the striker a new deal, but the Telegraph reports that the Arsenal target has already decided that he wants to leave the club this summer, and would prefer a move to the Emirates than a switch to Paris Saint-Germain.
The Telegraph reports that the Gunners have seen a £29.3m bid for the 25-year-old rejected, and Lyon are now hoping to put an end to speculation by getting the France international to sign a new contract.
But the Telegraph adds that Lacazette has now set his heart on a move. And while PSG are also interested in signing him, the Telegraph claims that he would rather join Arsene Wenger's side as he does not want to join another French club having spent well over a decade coming through the ranks with his current team.
However, Arsenal will have to raise their bid significantly if they hope to capitalise on the situation. The Telegraph reports that they are prepared to up their offer to £35m, which is likely to also be knocked back as Lyon hold out for at least £42.2m.
While a fee of that size would make signing Lacazette a gamble, he has shown that he has the ability to prove it is a risk worth taking.
He has scored 63 league goals in the last three seasons, including 27 in the 2014-15 campaign which saw him finish as the top goalscorer in the French top flight.
And with the Gunners mounting one of their best title challenges in recent seasons last term, replicating that kind of form in England would surely see Wenger's men clear that hurdle that has proven just too big over the past 12 years.