Canadian AI startup Cohere has struck a deal to acquire German peer Aleph Alpha, as the push for sovereign AI systems accelerates.
The deal, endorsed by both governments, will create a combined group valued at a reported $20 billion. According to the German business daily Handelsblatt, which first reported the news, Cohere’s shareholders will receive about 90% of the shares, with the remaining 10% going to Aleph Alpha.
At $20 billion, the valuation is a big step up for both startups. Cohere, which was reportedly in the market for fresh funding, was previously valued at $6.8 billion in August following a $500 million round led by Radical Ventures and Inovia Capital. Aleph Alpha’s valuation wasn’t disclosed at its last funding round in 2023, but the Financial Times put it at roughly €500 million ($585 million).
Both companies have struggled to compete against the dominant US models. Originally focused on developing LLMs, Aleph Alpha pivoted in 2024 to broader AI support. Cohere chose to eschew consumer AI, focusing on large enterprises such as Dell and Oracle.
The deal is as much a political transaction as a commercial one. Growing unease about dependence on US technology has pushed sovereign AI to the top of government agendas in Europe and beyond.
Together, Cohere and Aleph Alpha serve as a counterweight to American hyperscalers, enabling enterprise and public sector customers to retain control over their data and infrastructure.
The German government is expected to be an anchor customer for the combined group. German multinational retailer Schwarz Group, which co-led Aleph Alpha’s $500 million Series B in 2023, is committing $600 million to Cohere’s upcoming Series E. Once closed, the new group will operate under the Cohere brand with dual headquarters in Canada and Germany.
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