Vice-president Adriano Galliani is confident the defender's will to join the Rossoneri will eventually force through a transfer, despite the Ligue 1 champions playing hard ball
The Rossoneri have prioritised the signing of a new defender following the sale of Thiago Silva to Paris Saint-Germain in July, and the France international is currently their chief target.
However, both clubs are some way off in their valuation of the stopper, with the Ligue 1 champions' president Louis Nicollin recently mocking the Italian side's chances of landing his prized asset.
On Saturday, Galliani told reporters: "Montpellier have rejected our offer, and an agreement for the player cannot be found. Therefore, we have closed this chapter.
"We have already identified new targets, but we will not mention any names, even under torture."
Yet despite the AC Milan chief's admission that they have reached an impasse over the signing of Yanga-Mbiwa, it could resume at any time before the August 31 deadline.
Milan are also hoping that the Montpellier man, himself, can help orchestrate a move. The 23-year-old is believed to have requested permission from his club to depart for San Siro this summer.
If a fee cannot be settled upon for Yanga-Mbiwa, then other defensive targets include Chievo's Marco Andreolli and Andreas Granqvist of Genoa, while Porto ace Rolando is another option.