Eastlands club will move to sign Bernabeu hero as Brazilian signs Nou Camp extension.
Manchester City will turn their sights to Real Madrid defender Sergio Ramos after losing out on Barcelona full-back Dani Alves.
Ramos, 24, joined Madrid in 2005 from Sevilla for £23million but contract extension negotiations have stalled amid suggestions of a row with manager Jose Mourinho.
Eastlands boss Roberto Mancini likes the Spain World Cup winner because he can play at right-back and centre-half.
Madrid do not want to sell the fan-favourite but if Ramos refuses to sign a new contract the La Liga giants will have little choice.
City will attempt to sign the £33million-rated player in the summer as Dani Alves signed a new four-year deal at Barcelona.
The 27-year-old was linked with moves to Eastlands and to Chelsea after contract negotiations broke down.
“Barcelona announces that they have reached an agreement with Dani Alves to extend his contractual relationship with the club for three more seasons until June 30, 2015,” read a club statement on their website.