The Gunners suffered a blow last week after the England international broke his ankle during Arsenal’s 0-0 draw with Sporting Lisbon in the Europa League at the Emirates Stadium.
Welbeck is expected to be a long-term absentee for the north London side, which leaves Unai Emery’s squad slightly lightweight in terms of forward options.
Pepe is enjoying a break out season at Lille after an impressive return of eight goals and five assists in 13 games in the Ligue 1 in the 2018-19 campaign.
Balague, who is a regular on Sky Sports’ Transfer Talk podcast, has revealed that Arsenal have made an approach to sign Pepe.
“It’s mostly from wide areas coming inside that makes him special and it’s what he does with the ball in small spaces that makes him special,” Balague said speaking on his YouTube channel, as quoted by the Daily Express.
“That’s why Arsenal are looking into the possibility of signing him. Yes, they’ve approached Lille.
“He cost about €15m (£13m) when he came from Angers, right now Lille will be asking for €50m (£43m).
“I’m not sure he is that value yet but certainly he is on the way up.”
Arsenal have relied upon the goals of Alexandre Lacazette and Pierre-Emerick Aubameyang to keep them in the hunt for a top-four spot this season.
The Gunners duo have netted a combined 12 goals in Arsenal’s 12 games in the Premier League so far to leave Emery’s side in fifth place.
And Balague shed light on what position Pepe could play in the Arsenal team should move come to fruition.
“He’s one of those players that have had a great start to the season,” Balague said of Pepe.
“He’s scored eight goals already, nine assists and he’s got a great ability with his left foot.
“He’s mostly left-footed, plays on the right-hand side but also on the left-hand side.”
Pepe scored 13 times and made four assists in 36 games in Ligue 1 in the 2017-18 season to highlight his undoubted talent.
The Lille forward has netted three goals in eight games for the Ivory Coast national team.
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