The 26-year-old signed with Real Madrid two years ago from Porto and failed to break in at right-back ahead of the impressive Dani Carvajal.
Just days after manager Pep Guardiola raised eyebrows with the £45m signing of Tottenham's Kyle Walker, the Spaniard moved quickly to reinforce his defensive ranks with the signing of the Brazilian global.
Manchester City, which finished third in the Premier League and was eliminated from the Champions League in the Round of 16, does need additional depth at the position with right back Bacary Sagna being one of four players released by the club in May.
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Whilst Guardiola insisted no deal for Danilo was complete confirmation of a rival suitor for the Brazilian will not be welcomed by Chelsea, who have already missed out on Romelu Lukaku to Manchester United this summer.
Should City manage to push forward with the transfer, Danilo is expected to meet up with the rest of the City squad in the USA.
With City having already signed Walker, Danilo would likely be stepping into a similar situation under Pep Guardiola. It's also been reported in recent days that Guardiola is looking to bring in Napoli keeper Pepe Reina.
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