The 30-year-old has expressed a desire to return to Bayern, where he came up through the academy before moving on in a career that has seen stops at several different German clubs.
Bayern have been in the market for a second striker to help support Robert Lewandowski, and negotiations for Wagner have been ongoing since last month.
And Nagelsmann has now admitted those talks are close to wrapping up, with Wagner set for a return to the Bavarians.
The draw meant Hoffenheim were eliminated from the Europa League after the group stage.
This season the striker has six goals in 17 appearances in all competitions.