"AC Milan has received a significant offer for its player Alessio Romagnoli from Chelsea FC," the club said in a statement on their website.
"The player is not for sale, therefore this negotiation will not continue. The club wants to thank Chelsea FC with whom we will continue to have a great working relationship."
The 21-year-old Romagnoli, who joined Milan from Roma in 2015, was a mainstay in Milan's defence last season, making 34 appearances, and is considered one of the brightest prospects in Italian football.
Chelsea manager Antonio Conte has made strengthening Chelsea's defence a priority this as Kurt Zouma's long-term knee injury has left him short of options.
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Chelsea have also been linked with Napoli centre-back Kalidou Koulibaly.
(Reporting by Shravanth Vijayakumar in Bengaluru, editing by Ed Osmond)
