Lyon are set to complete the signing of Jason Denayer, in what is a big blow for Celtic, who had been considered favourites to land the Belgian.
The centre-back has been tipped to move away from Manchester City this summer, but his destination has been unclear.
Celtic were linked with a move for the Belgian, who was on loan at the club in the 2014/15 campaign, but Denayer is Lyon bound.
Lyon president Jean-Michel Aulas confirmed that he has negotiated with Manchester City for a defender, claimed to be Denayer, following Les Gones' 1-0 Ligue 1 defeat at Reims on Friday night.
Aulas confirmed that Lyon will now close the deal; Denayer is already in Lyon, according to French sports daily L'Equipe.
The news will be a blow to Celtic, who could need to sign another central defender soon.
Dedryck Boyata is keen to quit Celtic and is pushing to find the exit door, while refusing to extend his contract with the Scottish champions.
Denayer could have been an option to replace Boyata at Celtic Park.
