The Premier League champions have been chasing the 27-year-old Algerian forward for some time and after failing to land him in the January transfer window, seemed destined for success this time around.
Recent reports claimed the clubs had agreed a fee of around £80 million and it was Mahrez who was holding things up by demanding a cut of the profit that Leicester make on him.
However, the latest update suggests that Mahrez remains keen to make the move to the Etihad Stadium, just as he was in January when he was left frustrated with the Foxes for failing to sell him at the time.
And, while the two sides are thought to be edging closer to an agreement, it is in fact the fee for him which remains the sticking point.
It does seem very likely that Mahrez will leave given that Foxes boss Claude Puel has already been splashing the cash to bring in the likes of Ricardo Pereira, Jonny Evans and James Maddison.