The Gunners are hoping to secure the signing of the Frenchman before the transfer window closes.
An offer of £15 million was previously rejected, and an improved bid is expected.
"That offer has since been increased to £20m with add-ons up to the value of another £2.5m.
"However, the payment would be staged over four years. Something which of course we saw last season with the transfer of Kieran Tierney to the Emirates.
"Celtic would prefer to have a much bigger payment up front."