Manchester United have been hit with another transfer blow after Pepe is said to be ready to sign a new contract to further extend his stay with Real Madrid, Express reports.
The 32-year-old emerged as a defensive target for manager Louis van Gaal amid speculation that Sergio Ramos is ready to snub a move to Old Trafford.
Real have now stepped up their efforts to tie the Portugal international on a new deal as his current one is set to expire at the end of the upcoming campaign.
It is believed that the centre-back is ready to accept the terms that will ensure his stay at the Bernabeu for at least two more years.
This means United are still unable to confirm a deal for another central defender, especially with moves for both Ramos and Nicolas Otamendi also being put on hold.
Pepe featured a total of 38 times in all competitions for his side last term, scoring two goals and providing another three assists.