Real Madrid are increasingly certain that Pepe will not be at the club next season and have identified a replacement in Felipe Monteiro of Porto.
Real Madrid have reportedly reached a verbal agreement with Monteiro.
Porto are in need of transfer funds to pay off their debt.
Monteiro has a contract at Porto that runs until June 2021 and a minimum release clause of €50 million. However, sources close to the Portuguese club consulted by AS have claimed that an offer in the region of €25 million to €30 million.