The Foxes managed to hold on to their star man following a £60m bid from the champions in January, but City have revised their offer this summer and the Algerian is now expected to leave.
Mahrez has been instrumental in Leicester’s recent successes, most notably in their famous title triumph under Claudio Ranieri. The Algeria international has 35 goals and 25 assists in his last three season at the King Power Stadium, which has alerted Pep Guardiola's side.
Leicester had hoped to convince Mahrez to stay but appeared to be resigned to losing him after the player went on strike following his failed winter move. The Foxes will look to make the most of any deal though and not just from a financial point of view as they consider a player-plus-cash deal.
The club are ready to revise their own interest in Manchester City star Patrick Roberts and would like to see him come the other way in the deal. According to the Telegraph, Guardiola does see a future for Roberts at the club but would be open to the switch if it means landing Mahrez.
The Citizens rate their young winger at around £15m but it remains to be seen how much of the proposed £60m fee for Mahrez will be attributed to Roberts. The 21-year-old winger has spent the last three seasons on loan at Celtic, where his 18 goals have helped lead Brendan Rodgers' side to two consecutive league and cup trebles.
Leicester have expressed an interest in taking Roberts before, but Manchester City were happy with the progress he was making in the Scottish Premiership. The Englishman could offer a near like-for-like replacement for Mahrez, which Leicester see as a priority before they will sanction any deal.