Former Real Madrid centre-back has favoured a move to Monaco over Arsenal, according to reports in France.
The 35-year-old became a free agent last month after he and Besiktas mutually agreed to terminate his contract and was expected to head back to his homeland of Portugal to join Porto.
However, French publication L’Equipe, as reported by Metro, claim that Pepe will join Thierry Henry’s Monaco after rejecting a move to Arsenal.
Unai Emery is desperate to add a centre-back to his squad this month following several defensive injuries, including the long-term one suffered by Rob Holding who will miss the rest of the season, and has recently stated that he will be looking to do business to reinforce his back-line in the upcoming weeks.
Pepe had been identified as a potential recruit and L’Equipe suggested the Gunner made a late approach for the Portuguese defender but was turned down in favour of a move to struggling Monaco.