Posted On September 16, 2026
Canada’s Cohere and Germany’s Aleph Alpha have signed a definitive merger agreement to create an AI company valued at roughly $20 billion, bringing together two of the most prominent names betting that enterprises and governments want an alternative to consumer-focused AI giants.
The combined company will keep the Cohere name and operate from dual headquarters in Toronto and Berlin. Aleph Alpha’s Heidelberg operation will become a research hub, and Aleph Alpha co-chief Ilhan Scheer will join Cohere as chief operating officer.
“We are announcing the signing of a definitive business combination agreement with Aleph Alpha, following the release of our planned partnership in April of this year. Operating globally as Cohere, the unified company will effectively create the first transatlantic sovereign AI solution,” Cohere said in a blog post.
Behind the merger sits an even bigger infrastructure bet. Schwarz Group, the German retail conglomerate that owns Lidl and cloud provider StackIT, is investing €500 million in the combined company. The group plans to spend between €11 billion and €13 billion on a German data-center campus expected to house up to 100,000 AI chips, providing compute capacity through StackIT, Reuters reported.
That pairing of models, software and European-controlled infrastructure gets to the heart of the deal.
Cohere CEO Aidan Gomez said the companies are responding to demand for AI “powerful enough to compete, but secure and governable enough to trust.”
The merger was first disclosed in April at a valuation of about $20 billion (€17.34 billion). The companies did not disclose revised financial terms Wednesday, and the transaction remains subject to regulatory approval.
A $20 billion bet on sovereign AI
Cohere and Aleph Alpha arrive at this merger from very different positions.
Founded in 2019, Cohere has raised about $1.6 billion from investors including Nvidia and AMD and reached a $7 billion valuation in 2025. Rather than chase the consumer chatbot market dominated by OpenAI and Google, Cohere has concentrated on enterprises and governments.
Its Command family of AI models can run inside customers’ own computing environments, giving organizations greater control over where sensitive information is processed. Cohere’s North platform extends that strategy into workplace AI and public-sector deployments.
Aleph Alpha, founded in Germany the same year, once looked like Europe’s answer to the leading U.S. AI labs. It later pulled back from the expensive race to build frontier models and shifted toward AI integration software, enterprise deployments and government contracts.
That shift gave Aleph Alpha relationships that could prove valuable to Cohere’s European ambitions. The German company has worked with institutions including Germany’s Ministry for Digital Affairs and State Modernization and the Baden-Württemberg regional government. It has raised more than $600 million.
The financial gap between the two businesses is striking. Cohere reported $240 million in annual recurring revenue last year. Aleph Alpha reported less than €1 million in revenue in 2023, according to its latest public accounts.
The merger comes as Europe searches for ways to reduce its dependence on foreign AI infrastructure. France’s Mistral raised €3 billion last week at a valuation above €21 billion, another sign that investors are willing to back companies positioned as European alternatives in AI.
Cohere’s approach is different. Rather than trying to win the chatbot popularity contest, the company is betting that governments, banks, manufacturers and other large organizations will pay for AI they can deploy under tighter controls.
Schwarz Group adds another piece to that strategy. Owning the models and enterprise software is one thing. Access to locally operated computing infrastructure gives the combined company a stronger pitch to European customers concerned about data residency, security, and regulatory control.
The Cohere-Aleph Alpha merger is less about building another ChatGPT rival than assembling an AI stack for institutions that do not want their most sensitive workloads leaving their control.
At $20 billion, that’s a very expensive bet. Europe is about to find out how much demand exists.
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