The 23-year-old has been a stalwart for the German giants since making the switch from MLS outfit Vancouver Whitecaps in December 2018, appearing 184 times across all competitions.
Despite a largely-disappointing campaign for the Bavarians so far, Davies has enjoyed a productive season, providing four goal contributions from defence in 21 Bundesliga appearances.
Although Thomas Tuchel's side currently sit 10 points behind Bayer Leverkusen in the race for the German crown, the left-back has a real opportunity to win his second Champions League, with the Munich club facing Arsenal in the quarter-finals next month.
According to MARCA, Real Madrid have put their long-term push for the services of Davies on hold as a situation involving current club Bayern Munich unfolds.
The report claims that the Bavarians have placed a contract offer on the table for the Canada international, who is yet to agree to fresh terms in Germany.
It is understood that the former Whitecaps defender has until early April to shake hands with Bayern over a new deal, or to propose a counter offer.
If that deadline is not met, it is said that Davies and his representatives will have to bring a resolution to the table — one which could involve Carlo Ancelotti's side.
It is believed that the Bundesliga holders are aware that the 44-time international could be departing the Allianz Arena at the conclusion of the 2023-24 campaign.
Despite this, Bayern are planning to drive the La Liga giants a hard bargain for the signature of Davies, with a starting point of the negotiation to be around the €50m (£42.8m) mark.
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