The 27 year-old Spanish international has been been targeted by Arsene Wenger this summer, but the Champions League-bound side have rebuffed their offer
As exclusively revealed by Goal.com, the deal to bring the Spaniard to the Emirates has stalled over the two clubs' differences in valuation, with Malaga thought to be holding out for a figure closer to £20m for the winger, and Pellegrini has stated that Cazorla will not be leaving if he can help it this summer, arguing that it smacks of a lack of ambition.
"There are always offers made for certain players, when it comes to team restructuring," Pellegrini told the club's official website.
"At the moment, we’ve been offered £15.6 million (€20m) for Santi Cazorla; selling him for this amount of money is practically giving him away.
"I don’t think the club has any intention of doing so; I've spoken to Abdullah Ghubn and the Sheikh a lot about this, and they’re not thinking about it.
"I believe it would belittle our intention to play in the Champions League, obviously getting offers for players is always worth considering, but Santi leaving here for 20 million wouldn't look good to other teams."
The 27 year-old signed for Malaga last summer from Villarreal and proved a great success as the side went onto clinch fourth place in the league, but after some of his wages went unpaid, he is thought to be considering his future.