Real Madrid see Jesus Vallejo as a replacement for Pepe.
AS says Vallejo will be back with Real Madrid as of 30 June 2017, and will be returning to the Spanish capital, and Zinedine Zidane's squad, to stay.
With it looking almost certain that Pepe will be on his way (his contract finishes this coming summer and he's failed to sign a new deal) there will be a central defender sized hole in Zidane's squad, and the French coach, having seen Vallejo's performances in Germany with Eintracht Frankfurt, where he's on loan, has decided he's the man for the job.
Real Madrid are currently sending a scout to every second game Vallejo plays, to watch him in person, and the reports are impeccable so far this season. He's started 16 of Eintracht's 18 games so far this season.