Brighton have stepped in for Stevenage Borough defender Ben Wilmot.
Sky Sports says a Watford spokesperson says the club had a £500,000 bid turned down in January and are now pursuing other options.
A separate source revealed Stevenage now value the player at more than £1million.
Brighton are another club understood to be interested in Wilmot, as well as several Championship clubs.
Wilmot was not in the squad for Tuesday's 1-1 draw against Mansfield, after he was omitted from the squad for the previous game at Newport.