Rangers manager Michael Beale has been keen on adding a defender to his squad following a 5-1 defeat at the hands of PSV Eindhoven in the Champions League qualifier.
The Leicester City defender, whose brother plies his trade in Glasgow as well, has been linked with a move.
Souttar is not currently a key member of Enzo Maresca’s side and the Foxes are open to letting him leave.
However, that move has now been jeopardised owing to Rangers’ lack of Champions League income.
Yet another reason for the move falling through is the Gers’ inability to make room for the player in their squad.
Rangers had been potentially looking at moving on Liverpool player Davies. However, since that has not taken place yet Beale cannot sign Souttar.
Souttar would have added important Scottish top-flight experience to the Rangers team having played for Dundee United and Ross County.
