It is believed that the two sides have settled on a fee in the region of around 18 million euros but the latest sources of news say that Carlo Ancelotti will personally deny the transfer into taking fruition.
The former PSG boss who has come to Madrid as a replacement for Jose Mourinho still wants the defender in Madrid and has assured Pepe that he will feature in the first team plans next season.
Pepe spent much of last season on the bench at the Los Blancos with a mixture of injuries and also a young man in the form of Raphael Varane displaying red hot form in tandom with Sergio Ramos.