Manchester United are ready to pull out of the race to sign Elliot Anderson, sources have told ESPN.
United made the England midfielder one of their top targets ahead of the summer transfer window as the club look to bolster their midfield.
But concerns over Nottingham Forest's valuation have prompted club bosses to take a step back in their pursuit of the 23-year-old.
Sources have told ESPN that Manchester City have made an offer worth a total of more than £120m, including performance-related bonuses.
United's initial valuation of Anderson was between £80m and £90m and sources have told ESPN that they are reluctant to get into a bidding war with City.
There are also concerns that Anderson has decided he would prefer to move to the Etihad Stadium if he leaves Forest this summer.
United remain in the hunt for at least one more midfielder.
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A deal with Atalanta for Brazilian international Ederson has already been agreed and there's also interest in Mateus Fernandes, Alex Scott and Sandro Tonali.
Meanwhile, sources have told ESPN that United have not yet been informed by Barcelona about whether they plan to trigger their €30m option to make Marcus Rashford's move permanent.
The Spanish side have until June 15 to decide whether to sign Rashford, who is under contract at Old Trafford until 2028.
If Rashford cannot secure a move away, he will be expected back at Carrington after the World Cup for preseason.
Sources have told ESPN that head coach Michael Carrick and director of football Jason Wilcox would decide how to handle the situation if Rashford has to return.
Last summer, the England forward was made to train away from the first team group after input from then manager Ruben Amorim.
Carrick, a former teammate of Rashford's and an assistant coach during his successful spell under former boss Ole Gunnar Solskjaer, took over from Amorim in January and was appointed permanent head coach on an initial two-year contract in May.
