Merger of Cohere and Aleph Alpha: creation of a sovereign AI corporation with a valuation of $20 billion

Canadian technology company Cohere has officially announced the acquisition of German AI startup Aleph Alpha, forming a new transatlantic alliance in the field of artificial intelligence. The deal is being carried out with strong financial and strategic support from the European consortium Schwarz Group, the parent company of the Lidl grocery chain. According to information from the German business publication Handelsblatt, the preliminary agreement values the combined corporation at approximately twenty billion dollars. This represents a significant leap for Cohere, which was valued at $6.8 billion in the previous round, and underscores the scale of the partners' ambitions in the global market.

The merger is not a union of equals, as the Canadian developer will lead the new structure after final approval of the deal by regulators and shareholders. The companies' commercial metrics differ significantly: while Cohere's regular annual revenue reached 240 million dollars by the end of 2025, Aleph Alpha has thus far generated negligible revenue amidst substantial losses. Nevertheless, Schwarz Group, being one of the main shareholders of the German startup, fully supports the consolidation and becomes a strategic sponsor of the combined organization.

The integration aims to combine the complementary technologies of both teams. Cohere CEO Aidan Gomez noted during a press conference that the German colleagues' focus on small language models, European languages, and tokenizers perfectly complements their own developments in large language models. Aleph Alpha, which retained a staff of 250 employees, previously created a specialized line of PhariaAI models, targeted at enterprises and government institutions in Europe.

A key element of the new alliance's sovereign strategy is the use of independent European infrastructure. As part of the investment agreement, the combined company is expected to actively utilize STACKIT — the sovereign cloud service of Schwarz Digits' IT division. This technological solution is critically important for attracting clients in highly regulated sectors of the economy. The new structure plans to aggressively promote its services in the defense sector, energy, traditional finance, healthcare, manufacturing, telecommunications, and public administration, where customers demand uncompromising guarantees of confidentiality and independence from American providers.

The formation of the alliance is taking place with the direct involvement of the Canadian and German governments, which seek to reduce their countries' strategic technological dependence. German Minister for Digital Affairs Carsten Wildberger and his Canadian counterpart Evan Solomon, whose countries recently launched the bilateral Sovereign Technology Alliance initiative, were present at the press conference. Such alliances are a response to the dominance of US corporations, such as OpenAI, and attempts by other players to consolidate the market.

The long-term prospects of the Canadian-German association will depend on how much European organizations trust an initiative involving a North American partner. Aidan Gomez emphasizes that Cohere will become a single Canadian-German company, but experts note potential future structural changes. Should the corporation go public with an initial public offering, the question of control and ownership could become less transparent, requiring additional efforts to maintain its status as a sovereign provider of artificial intelligence solutions.