The 20-year old Swedish attacker has been offered a long-term deal by the English champions who then want to send him out on loan once they tie him up.
Guidetti, currently sidelined by injury, has been the subject of plenty of interest from around Europe following his brilliant loan spell with Dutch club Feyenoord last season but his agent Per Jonsson confirming he is still in talks with City.
"We are negotiating about his future," he told Expressen.
"It's obvious that many clubs would have wanted to buy him if he didn't have the injury.
"He will be fit soon."