(Bloomberg) -- Siemens AG is in talks about a potential deal to acquire software maker Altair Engineering Inc., people familiar with the matter said, in what would be its largest-ever acquisition.
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The German engineering group is working with advisers as it discusses a move for Troy, Michigan-based Altair, according to the people, who asked not to be identified discussing confidential information. The US company has been exploring a sale and other bidders could also emerge, they said.
Shares in Altair have risen 23% this year, boosted by a Reuters report earlier this week about a potential sale. The company has a market value of roughly $8.9 billion. Siemens was trading broadly flat on Thursday, valuing the company at about €144 billion ($155 billion).
Talks with Siemens are advanced, though there's no certainty that they will lead to an agreement, some of the people said. Representatives for Altair and Munich-based Siemens declined to comment.
Led by Founder and Chief Executive Officer James Scapa, Altair provides engineering software to companies in the aerospace, automotive, energy and financial services industries, among others. Demand for such tools is expected to grow in lockstep with the increased adoption of artificial intelligence in everyday life.
Under CEO Roland Busch, Siemens has been exiting heavy equipment businesses and shifting to higher-margin, software-driven product lines to catch up to the profitability of automation peers like Rockwell Automation Inc. and Schneider Electric SE.
The German company is scheduled to report fourth-quarter earnings on Nov. 14. Digital Industries, which is the Siemens's biggest unit in terms of sales, specializes in factory automation software and hardware. Altair is scheduled to report earnings on Oct. 30.
"The acquisition could be a logical strategic fit for Siemens DI Software and could be accommodated within the current balance sheet capacity of the group," analysts at RBC Capital Markets wrote in a note dated Oct. 23. "However, the high valuation of Altair means any acquisition could be marginally earnings dilutive."
Manufacturers have been hunting for software acquisitions as machine production moves increasingly from factory floors to computers. France's Schneider held talks to buy engineering software maker Bentley Systems Inc.,which is worth $16 billion, before discussions ended in May.