Manchester City believe they have won the race to sign Isco Isco, 24, will have just one year left of his current deal this summer and is certain to leave the Bernabeu as he is unsettled.
The Spaniard came close to signing for City in 2013 but instead chose to leave Malaga for Real after persuasion from Zinedine Zidane.
Guardiola is looking to make changes this summer and is keen to bring in younger players at City.
Isco is an obvious long-term replacement for David Silva, although is more versatile.
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