A statement released by the Blues on Friday indicates that he has been turned down flat.
"A takeover bid was made to the board's lawyers by representatives of an undisclosed party," read the statement. "But this was summarily rejected."
It continued: "The board of Birmingham City FC can clarify its position following recent media speculation regarding the ownership of the club.
"After comments made to the media, the club would like to place on record that there are no discussions taking place with any group associated with Gianni Paladini.
"No further comment will be made at this stage."