Siemens in talks to acquire software group Altair

(Bloomberg) — Siemens AG is in discussions about a potential deal to acquire software maker Altair Engineering Inc. to take over, people familiar with the matter said, in what would be the largest acquisition ever.

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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 explored a sale and other bidders could also emerge, they said.

Shares in Altair are up 23% this year, boosted by a Reuters report earlier this week about a possible sale. The company has a market value of approximately $8.9 billion. Siemens traded largely flat on Thursday, valuing the company at about €144 billion ($155 billion).

Talks with Siemens are advanced, but there is no certainty they will lead to an agreement, some said. Representatives for Altair and Munich-based Siemens declined to comment.

Led by founder and CEO James Scapa, Altair provides engineering software to companies in the aerospace, automotive, energy and financial services sectors, among others. The demand for such tools is expected to grow in parallel with the increasing adoption of artificial intelligence in everyday life.

Under CEO Roland Busch, Siemens has exited its heavy equipment business and moved to higher-margin software-driven product lines to boost the profitability of automation peers like Rockwell Automation Inc. and Schneider Electric SE.

The German company will report fourth-quarter results on November 14. Digital Industries, Siemens’ largest unit in terms of revenue, specializes in factory automation software and hardware. Altair is expected to report earnings on October 30.

“The acquisition could be a logical strategic fit for Siemens DI Software and could be accommodated within the group’s current balance sheet capacity,” RBC Capital Markets analysts wrote in an Oct. 23 note. “Altair’s high valuation means that any acquisition could have a marginal profit-dilutive effect.”

Manufacturers are on the hunt for software purchases as machine production increasingly moves from factory floors to computers. France’s Schneider was in talks to buy tech software maker Bentley Systems Inc., worth $16 billion, before talks ended in May.

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