ESPN FC's Mark Ogden reported Manchester City "could yet return for the winger in the summer" after missing out on a late January deal, and the Foxes will instead seek to find a buyer in one of Europe's other top leagues.
Mahrez returned to Leicester training on Friday after staging a protest at the collapse of his January departure, with his employers said to have told the Citizens it will require a British-record £95 million fee to sign the wide man.
Ogden added the Algeria international will not be considered to play a part in the matchday squad travelling to face City at the Etihad Stadium on Saturday, having gone missing since the failed deadline-day move:
It's understood the Citizens were only willing to part with as much as £65 million after losing Leroy Sane to injury for six weeks, joining fellow key attacker Gabriel Jesus on the sidelines.
But the Foxes' high valuation of their star man—more than the £89 million Manchester United paid to re-sign Paul Pogba from Juventus in 2016—could mean City are forced to turn their attentions elsewhere.
City manager Pep Guardiola was complimentary of the player when referring to his alleged omission in Week 27 of the Premier League campaign, per BT Sport:
According to Ogden, one of Mahrez's foreign admirers, Italian giants AS Roma, retain an interest in the player but would unsurprisingly balk at the cost Leicester are said to be demanding for his signature.
Despite the recent neglect of his training duties and fallout from the winter transfer window, Mahrez has reigned as one of Leicester's biggest assets this season.
The 26-year-old has scored eight goals and recorded seven assists in 23 Premier League starts this season, and only by continuing to impress is he likely to attract investment from a big-spending outfit in the summer.