New manager Manuel Pellegrini is looking to bolster his defensive options following Kolo Toure's move to Liverpool and has targeted the centre-back.
Madrid are looking for around €25m (£21m) for the Portugal international and City's move for the 30-year-old is imminent, according to The Sun.
Pepe played 28 times for Madrid last season.
Restore Data
| Team | P | W | D | L | F | A | GD | PTS | |
| 1 | Liverpool | 25 | 18 | 6 | 1 | 60 | 24 | 36 | 60 |
| 2 | Arsenal | 25 | 15 | 8 | 2 | 51 | 22 | 29 | 53 |
| 3 | Nottingham ForestNott'm Forest | 25 | 14 | 5 | 6 | 41 | 29 | 12 | 47 |
| 4 | Manchester CityMan City | 25 | 13 | 5 | 7 | 52 | 35 | 17 | 44 |
| 5 | Bournemouth | 25 | 12 | 7 | 6 | 44 | 29 | 15 | 43 |
| 6 | Chelsea | 25 | 12 | 7 | 6 | 47 | 34 | 13 | 43 |
| 7 | Newcastle UnitedNewcastle | 25 | 12 | 5 | 8 | 42 | 33 | 9 | 41 |
| 8 | Fulham | 25 | 10 | 9 | 6 | 38 | 33 | 5 | 39 |
| 9 | Aston Villa | 25 | 10 | 8 | 7 | 35 | 38 | -3 | 38 |
| 10 | Brighton & Hove AlbionBrighton | 25 | 9 | 10 | 6 | 38 | 38 | 0 | 37 |
| 11 | Brentford | 25 | 10 | 4 | 11 | 43 | 42 | 1 | 34 |
| 12 | Crystal Palace | 25 | 7 | 9 | 9 | 29 | 32 | -3 | 30 |
| 13 | Everton | 25 | 7 | 9 | 9 | 27 | 31 | -4 | 30 |
| 14 | Manchester UnitedMan Utd | 24 | 8 | 5 | 11 | 28 | 34 | -6 | 29 |
| 15 | Tottenham HotspurSpurs | 24 | 8 | 3 | 13 | 48 | 37 | 11 | 27 |
| 16 | West Ham UnitedWest Ham | 25 | 7 | 6 | 12 | 29 | 47 | -18 | 27 |
| 17 | Wolverhampton WanderersWolves | 25 | 5 | 4 | 16 | 35 | 54 | -19 | 19 |
| 18 | Ipswich TownIpswich | 25 | 3 | 8 | 14 | 23 | 50 | -27 | 17 |
| 19 | Leicester CityLeicester | 25 | 4 | 5 | 16 | 25 | 55 | -30 | 17 |
| 20 | Southampton | 25 | 2 | 3 | 20 | 19 | 57 | -38 | 9 |
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