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Ex-Liverpool star Alonso is set to return to his former club on a three-year contract, taking over from the departing Carlo Ancelotti.
Following the Champions League defeat to Arsenal last month, Bernabeu bosses met with Ancelotti and agreed to part ways.
Despite his triumphs since returning to the Spanish capital in 2021, this year's Champions League quarter-final exit and a faltering LaLiga title defence have marked the end of his reign.
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Marca reports that Ancelotti will bid adieu to the Bernabeu after Madrid's final match of the season against Real Sociedad.
His successor, Alonso, will bring along trusted assistant coaches Sebas Parrilla and Alberto Encinas.
Alonso was heavily linked with the Liverpool job last year when he steered Leverkusen to an unbeaten Bundesliga season, securing both the league title and the German cup.
The Spanish giants are set to face Al-Hilal from Saudi Arabia, Mexican heavyweights Pachuca, and Austria's Red Bull Salzburg in the group stage.
The news of Alonso's impending appointment comes just before Real's most crucial league match of the season
Barcelona have already claimed two domestic cup victories over Real this year, winning both the Supercopa and Copa del Rey.
Hansi Flick's side also inflicted a crushing 4-0 defeat on the reigning champions at the Bernabeu earlier this season
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