Cohere and Aleph Alpha merge to form $20B enterprise AI company

Cohere and Aleph Alpha finalize $20 billion enterprise AI merger

Canadian AI model developer Cohere and German AI company Aleph Alpha signed a definitive merger agreement on Wednesday, creating a combined entity valued at approximately $20 billion that will operate under the Cohere brand.

The merged company will maintain dual headquarters in Toronto and Berlin, while Aleph Alpha's Heidelberg office will focus on research activities. Aleph Alpha co-CEO Ilhan Scheer will join the combined organization as chief operating officer, according to details first reported by Reuters.

The transaction, originally disclosed in April, brings together two companies with complementary strengths in the enterprise AI market. Cohere develops Command, a family of open-source AI models designed to run within customers' own computing environments. Aleph Alpha has increasingly concentrated on helping governments and businesses deploy AI systems that comply with local regulatory requirements.

Why it matters

This merger reflects a strategic bet that enterprise and government customers will pay premium prices for AI systems that operate on their own infrastructure rather than in public clouds. As data sovereignty and regulatory compliance become critical concerns—particularly in Europe—the ability to offer powerful AI models that never leave a customer's premises could prove a significant competitive advantage against hyperscale cloud providers.

Major infrastructure investment from Schwarz Group

Lidl-owner Schwarz Group is investing €500 million directly in the new entity and committing between €11 billion and €13 billion in computing infrastructure through its cloud arm StackIT. The retailer is building a German data-center campus expected to house up to 100,000 AI chips, providing the merged company with substantial computing capacity.

Cohere CEO Aidan Gomez said the combination aims to meet demand for AI systems "powerful enough to compete, but secure and governable enough to trust."

Divergent revenue trajectories

The two companies enter the merger from very different financial positions. Cohere reported $240 million in annual recurring revenue this year, while Aleph Alpha reported revenue of less than €1 million in 2023, according to its latest public accounts.

Aleph Alpha, once promoted as Germany's AI champion, stepped back from developing frontier AI models and refocused on AI integration software. Co-founder Jonas Andrulis left the company earlier this year after relinquishing the CEO role in 2025.

The transaction remains subject to regulatory approvals. The companies did not disclose updated financial terms beyond the original $20 billion valuation.

The deal comes as European AI companies attract renewed investor interest. Mistral, Europe's leading model maker, raised €3 billion last week at a valuation exceeding €21 billion.

Details of the merger were first reported by Reuters.