Signing Riyad Mahrez would cost the Premier League champions a reported £75 million.
Mahrez has long cited his desire to part ways with the Foxes and is said to be desperate to link up with Guardiola's side following his failed transfer request in January, the second successive transfer window where Leicester blocked a potential move.
However, the 27-year-old's time at the King Power Stadium appears to be nearing its end after all, as according to the Express, negotiations between the two clubs are close to completion after City tabled an offer of £60m up front, with a further £15m performance related add-ons.
City's director of football Txiki Begiristain is believed to have remained in contact with Leicester following their failed approach in the winter window, when they tabled £50m plus winger Patrick Roberts.
The Foxes refused the offer as they wanted a cash only deal, a moved which infuriated Mahrez who then went on strike by refusing to turn up for training - where he was subsequently fined two weeks' wages in the region of £240,000.
Yet, with super agent Kia Joorabchian taking on the role of Mahrez's representative, the Leicester playmaker is now set to get his wish of sealing a move to a Champions League club.
Mahrez is not going to the World Cup after Algeria failed to qualify through their group, ensuring he will complete a full preseason this summer.
The 27-year-old notched 13 goals and 13 assists throughout the season and should he complete his move to City, he will become the club's record signing by surpassing the £57m fee paid for defender Aymeric Laporte.