Pepe joined the north London side for a club-record £72m from Lille in 2019 but has not been able to establish himself in the Premier League.

"Everyone at Arsenal wishes Nico well in France with Nice next season," the club said.

The Ivorian, whose contract expires in 2024, did not appear in any of Arsenal's opening Premier League matches this season. He has scored 27 goals in 112 games in all competitions.

He was introduced to Nice supporters before their Europa Conference League game against Maccabi Tel Aviv on Thursday evening.

Gunners manager Mikel Arteta has strengthened his squad during this transfer window, bringing in attacking talents Gabriel Jesus, Fabio Vieira and young Brazilian Marquinhos.

There have also been reports linking Arsenal with a move for Wolves winger Pedro Neto.