It has been reported that the striker will move to the German club on loan until the end of the season with the option to buy.
According to the report, Italian sides Torino and Sampdoria were interested in signing the 24-year-old as well.
Earlier this month, The Brentford Gazette reported of West Ham’s intention of making a bid of £6 million for Kramaric.
Kramaric joined Leicester from Rijeka in January 2015, but he has failed to make a huge impact at the King Power Stadium.
The Croatia international scored two goals and created six chances in 13 Premier League appearances last season.
So far this campaign, the former Dinamo Zagreb striker has managed to play in only two Premier League games, creating one chance in the process.
Leicester are second in the Premier League table at the moment with 44 points from 22 matches. The Foxes are level on points with leaders Arsenal and are behind only on goal difference.