The 21-year-old has spent the last nine years in the Nantes setup, initially joining the club's youth ranks in 2015 before developing into a key player at senior level.
Since making his professional debut in February 2021, Merlin has made 74 first-team appearances for the French club, including 11 starts in Ligue 1 as either a left-back or left wing-back this season.
Merlin was part of the Nantes squad that celebrated Coupe de France glory in 2022, the club's first trophy for over two decades, before finishing as a runner-up to Toulouse last season.
The France Under-21 international still has three years remaining on his contract at Stade de la Beaujoire, but a number of European clubs are believed to be interested in his services.
According to 90min, via Fichajes, Merlin has caught the eye of treble winners Man City, and manager Pep Guardiola is said to be determined to strengthen his options at left-back.
The report adds that Nantes could be willing to entertain offers for Merlin, but negotiating a deal for the highly-rated Frenchman 'will not be an easy operation'.
Man City are not the only clubs keeping tabs on Merlin as the likes of West Ham United, Celtic, Bayern Munich, Paris Saint-Germain and RB Leipzig have also been credited with an interest.
Celtic allegedly held a strong interest in Merlin in the summer, but a move to Scotland for the left-back ultimately failed to materialise as he expressed his desire to remain at Nantes.
"It's important to keep your head and not get turned by the transfer speculation," Merlin told reporters in August as quoted by The Scottish Sun.
"I feel I owe Nantes because last season I suffered with a big injury and I still have a lot to learn in football and at the club.
"I also know the Olympics are coming up and I would love to play for France in that. I did ask myself a question of whether I would have a better chance of doing that elsewhere. But I quickly came to my senses. I plan to play all this season with Nantes."
Guardiola currently has three left-back options at his disposal at Man City in the form of Josko Gvardiol, Nathan Ake and Sergio Gomez, the former of whom arrived at the Etihad Stadium in the summer for a reported £77m.
While both Gvardiol and Ake have featured regularly at either left-back or centre-back this season, Gomez has struggled for regular first-team football, starting just two of his five appearances in all competitions, and has been linked with a possible exit from the Citizens.
A recent report claims that Serie A giants AC Milan have expressed an interest in Gomez ahead of the January transfer window, and the Spaniard is said to be valued at around €18m (£15.7m).