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Spanish news outlet Marca had reportedly claimed the Galaticos will recall Jesus Vallejo in the summer and let Pepe leave the Santiago Bernabeu on a free transfer.
The 19-year-old, has dazzled on loan at Eintracht Frankfurt and Madrid boss Zinedine Zidane views him as a future star.
The news could put Arsenal and Manchester United. The Mirror claimed earlier this season that Gunners were monitoring Pepe’s situation closely as they look to bolster their defensive options.
A two-year-contract extension was mooted, but an agreement is yet to be reached. And it now looks like the veteran star could be packing his bags in the summer.
Manchester United boss Jose Mourinho is also a long-term admirer of the Portuguese. The former Chelsea boss isn’t averse to signing ageing stars and snapped up Zlatan Ibrahimovic in the summer.
Mourinho is trying to bolster his defensive options and he might be tempted to swoop for his compatriot. The 33-year-old is currently able to hold talks with other teams and sign a pre-contract agreement from January 1.