When was the Pep decision made?

I don't know, but it was something being prepared for some time.
I like to think Txiki/Soriano discussed City with Pep several times since they entered the club. When Bayern came in they decided Pep should take that role to develop himself even further as a coach and gain international experience as a manager with one of the best run clubs in Europe. With the bonus he could take his gained knowhow from within Bayern to City. It would offer more time for City to develop the CFA. Pellegrini is held high in respect by Pep and was probably seen as the perfect caretaker manager. Again, just my theory on things.
 

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