The Foxes striker has joined up with the England squad for Euro 2016 as his club future continues to be subject of speculation.
Arsenal are understood to have lodged a £20million offer, triggering a release clause in Vardy's current contract, and would be prepared to offer the 29-year-old lucrative personal terms of some £120,000 a week.
It has been reported Vardy will wait until after England's campaign has finished before making public any decision, with Leicester hoping an improved contract offer will keep him at the King Power Stadium
Vardy enjoyed a stand-out campaign for the Foxes, netting 24 league goals as the 5,000-1 outsiders won the title
The striker also cemented his place in Roy Hodgson's Euro 2016 squad and was voted the Footballer of the Year by the Football Writers' Association
However, Merson - who was part of the Arsenal side which won the league championship in 1988/89 and 1990/91 under George Graham as well as the 1993 FA Cup and also the European Cup Winners' Cup - does not believe the quick, short passing game of Arsene Wenger's team would suit Vardy at all.
Speaking to TalkSPORT, the former England international said: " I am absolutely flabbergasted with it
Arsenal don't get the ball forward quick enough for Jamie Vardy
No disrespect, but he plays at Leicester where everyone goes and has a go at them
"Twenty of his goals must have been over the top, balls that he is running on to, beat the goalie and great finish
You play for Arsenal, you kick off and the other team sit 10 men behind the ball."
Merson added: "Leicester suits Jamie Vardy, in my opinion
He is perfect for them
They play his way, they get the ball forward very quickly and he will keep on causing havoc
If he goes to Arsenal, I just don't see it
"That is no disrespect to him
I'm not saying he won't get goals, but I don't think he will get enough opportunities [at Arsenal]
They take too long to get the ball forward.
"I'm not having a go at Vardy
For what he does, he is different class, But you watch him for England the other night [against Portugal] and if you have got 10 players behind the ball..
I mean [Ricardo] Carvalho looked like [Franz] Beckenbauer."
England open their Group B game against Russia in Marseille on Saturday, when Vardy could be deployed in attack alongside Tottenham forward Harry Kane
Source : PA
Source: PA