Real Madrid GM Jorge Valdano insists they're not giving up on keeping defender Pepe.

Valdano was asked about the progress of new contract talks after victory at Espanyol.

"We are making progress with his renewal," said Valdano. "Last season, these questions were about (Gonzalo) Higuain and it was all resolved in the end.

"We know that he is a major player and so we're making every effort."

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