Pep Guardiola has moved swiftly to target Benfica centre-back Dias after encountering difficulty in bids for Napoli’s Kalidou Koulibaly and Atletico Madrid’s Jose Gimenez.
Dias is to join Manchester City with Otamendi going the other way, and according to TyC Sports’ Cear Luis Merlo, the Argentine will sign a three-year deal in Portugal.
He will not take a pay cut to join Benfica and will continue to earn the same salary as he currently does at Manchester City.
Otamendi, who will turn 32 years old over the course of the season, has played in Portugal before.
He was on the books at Benfica’s rivals FC Porto from 2010 until 2014, when he headed for Spain with Valencia.
Otamendi made 39 appearances across all competitions for Manchester City last season, picking up five yellow cards in the process.
The Argentine is now poised to leave Manchester City after winning the Premier League twice, the FA Cup once and the EFL Cup four times.
