And the former Barcelona coach confirmed that the 24-year-old German wants to leave the Etihad Stadium.
“Leroy said he doesn’t want to extend his contract,” Guardiola said.
“If we find an agreement with a club he will leave this summer, if not he’ll stay another year and will leave at the end of his contract.”
City and Bayern have yet to agree a fee for Sané, with recent reports stating there is a €30m difference between the clubs.
Guardiola stressed that City have done everything they can to try and keep Sané, who arrived from Schalke in 2016.
Pep added: “The club offered [a new contract] two or three times and he rejected it.
“When we make an offer to a player it’s because we want him. He has special quality. We want players who want to play with the club to achieve targets.
“He is a nice guy and I love him so much. I have nothing against – but he wants another adventure.”
In four seasons at City, Sané has made 134 appearances and scored 39 goals. He has missed all of this season up until now with a torn ACL.
Bayern tried to sign the speedy winger last year, entering talks with City, but Sané’s injury postponed his exit for a year.