Diego Maradona, father in-law to the Argentina international, recently stated that a transfer to Real Madrid represents the 'big break' Aguero needs, while further reports have since claimed Los Blancos hold a genuine interest in the 24-year-old.
However, according to Goal.com, Manchester City remain unconcerned by Real Madrid's apparent pursuit of Aguero, and the offer of a new deal comes more as reward for his performances rather than fear of the player leaving the Etihad Stadium.
The Argentine, who joined Manchester City from Atletico Madrid for a club record fee, will receive an offer of a new five-year deal and, although his salary will remain almost the same, the contract will contain a more generous bonus structure.
Aguero currently earns around £170,000-a-week, and the improved deal will be an extension of two years to the initial deal he penned when joining the club during the summer transfer window of 2011.
The player, who scored the winning goal in the victory over Manchester United on Monday evening, follows Yaya Toure in committing his future to the club, after the Ivory Coast international ended speculation about his future last week.