The Telegraph says the Gunners could replace Alexandre Lacazette with Lyon striker Dembele.
Dembele spent the second half of last season on loan at Atletico Madrid but was unable to make an impact at the Wanda Metropolitano.
He made just seven appearances for Diego Simeone's title-winning side, failing to score a single goal.
His overall record this season doesn't read much better, with Dembele finding the net just once in 23 appearances overall.
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