Manuel Pellegrini's side are exploring the possibility of a £15 million move for the Spaniard, whose contract expires in the summer of 2015 and could be tempted to leaveManchester City are considering a summer move for Athletic Bilbao midfielder Iker Muniain, Goal understands.
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Muniain's had a very promising season under Ernesto Valverde having struggled to hit the heights under former manager Bielsa in the last campaign.
With his contract due to expire in 2015, the club are set to sit down with him to discuss a new deal in the summer and are unwilling to sell for less than his release clause.Athletic's fans are getting restless as the situation resembles that of Fernando Llorente, who joined Juventus despite having suggested he would extend his stay at San Mames.
Bilbao were hopeful of tying Muniain to a new deal, and inserting a sizeable £40m buy-out clause, but, with talks continuing to hit an impasse, the Liga club are concerned their prize asset could have his head turned.
Once billed as the next big thing in Spanish football, Muniain has dipped under the radar in the last couple of years and has failed to build on his one cap for Spain that he earned back in 2012 in a friendly against Venezuela.
Muniain currently earns £2m-a-year at San Mames although City would be in a position to dwarf that amount should they successfully negotiate a fee with Athletic.
Pellegrini is confident that he can develop Muniain into a Premier League star, with the former Malaga boss having had a positive impact on Isco's career before the 21-year-old made the move to Real Madrid in the summer.
City are keen to boost their numbers in attacking midfield areas where Muniain would slot in to challenge the likes of David Silva, Samir Nasri and Jesus Navas for a starting berth in the 2014-15 campaign.
As well as chasing Muniain, City are looking at Porto stars Eliaquim Mangala and Fernando, while William Carvalho and Luke Shaw are also summer targets with the likes of Gareth Barry, Micah Richards and Jack Rodwell all likely to be moved on.