Nicolas Otamendi
Nicolas Otamendi is a reported target for both Manchester United and CityGetty

Manchester City are set to challenge Manchester United for the transfer of £35m ($55m)-rated defender Nicolas Otamendi, according to the Mirror.

The 2013/14 champions are currently pursuing a deal for midfielder Kevin de Bruyne and will make a move for the defender once a deal has been set to stone with the 24-year-old. While Wolfsburg are yet to agree a deal with City for the midfielder's signature, it is believed that the Belgian's persistence would lead to a conclusion sooner rather than later.

De Bruyne transferred from Chelsea in 2013 when Jose Mourinho arrived and now wants to give himself another chance in the Premier League, having made 27 assists in his last campaign in the Bundesliga.

City have already allowed Edin Dzeko to leave on loan to Roma and are on the lookout for replacements. The Cityzens have been linked with a move for Manchester United target Pedro, according to the Mundo Deportivo, but Manuel Pellgrini wants a more "physically present" player up top to replace the Bosnian.

Meanwhile, The Independent has reported that are United closing in on a deal for Otamendi, but City are willing to fight their local rivals for the Argentine's signature, who will be slotted alongside Vincent Kompany in the heart of defence.

Eliaquim Mangala has failed to live up to expectations and Otamendi will be a considerable upgrade to their options, having been in tremendous form for both club and country.

City started their league campaign with a 3-0 win over West Bromwich Albion on the opening weekend and are looking good to challenge for the title this season. With their attack settled down, Pellegrini is desperate to shore up other aspects of his squad to put in a proper challenge for the title, which fizzled out over the course of the campaign last season, in spite being joint on points with Chelsea in January.

Meanwhile, United also started the season by winning their first game 1-0 against Tottenham Hotspur and have a double header Champions League play-off scheduled against Club Brugge later this month.