Canada's Cohere to buy German company to create 'transatlantic AI powerhouse'

Toronto-based artificial intelligence startup Cohere Inc. is buying Germany’s Aleph Alpha GmbH to create what they call a “transatlantic AI powerhouse” that can take on the tech giants in the United States.

“The partnership aims to significantly accelerate the development of next-generation frontier models and systems while providing a secure alternative to dependence on any single vendor or infrastructure stack,” the two companies said in a joint statement on Friday.

The two companies are officially calling it a merger, but a source close to the discussions said Cohere is purchasing the German company. The company will be called Cohere, chief executive Aidan Gomez will stay in his role and Toronto will serve as its global headquarters, while Berlin will be its European headquarters.

The deal is still subject to regulatory approval and is expected to close in the coming months. The new business will be valued at US$20 billion, according to the source. The two companies declined to disclose the financial terms, but Schwarz Corporate Affairs GmbH & Co. KG, a German retailer, will invest 500 million euros in Cohere’s upcoming financing round.

Many countries have said they want to be less reliant on foreign AI models and technology infrastructure that is considered vital to economic and national security. For example, the European Union has made a major push to reduce its dependence on non-European tech and is boosting investments and driving usage of homegrown systems from cloud to AI providers.

The EU has said that it plans to mobilize 200 billion euros for AI investment in the bloc, while Canada has doled out billions of dollars to build domestic AI infrastructure and support homegrown deep-tech companies.

Ottawa this month opened applications for a public AI supercomputer and said it will provide up to $890 million in funds to the builder. The federal government released its $2-billion-plus sovereign AI computing strategy introduced in late 2024.

Canada and Germany earlier this year launched a partnership called the Sovereign Technology Alliance, which will focus on teaming up to expand AI computing infrastructure, AI research and commercialization and talent development.

“As countries look for secure, responsible and enterprise-grade AI, a Canadian-headquartered company is helping lead that future,” AI and Digital Innovation Minister Evan Solomon said in a statement on Friday. “This partnership … shows how trusted allies can work together to build sovereign AI capacity.”

Founded in 2019, Cohere has raised US$1.6 billion from Canadian and global investors, including Radical Ventures Investments Inc., Inovia Capital Inc. and Nvidia Corp., and develops AI models for enterprise rather than general-purpose AI chatbots such as ChatGPT.

Aleph Alpha was also founded in 2019 and originally developed large language models (LLMs). Once viewed as Germany’s national AI champion, it transitioned away from developing LLMs in 2024 to helping businesses and the public sector deploy AI.