The 20-year-old was wanted by Sunderland and Hull City but is set to move to the King Power Stadium after spending last season with Wigan in the Championship.
The 20-year-old spent last season on loan in the Championship at Wigan, but United is keen for the former Crewe man to gain some experience in the Premier League. Sunderland and Hull City were also keen on signing Powell, but he is now set for Leicester.
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Powell was signed by Sir Alex Ferguson and moved to Old Trafford from Crewe in 2012, making a handful of appearances during his debut season. He scored 12 goals in all competitions for Wigan last season and started United's 4-0 Capital One Cup defeat to MK Dons.
Goal understands Powell will be one of two attackers arriving at the King Power Stadium on deadline day, with Ipswich forward David McGoldrick set to complete an 10 million euro deal.