Cohere, the Canadian artificial intelligence company, has announced plans to acquire Aleph Alpha, the Heidelberg-based AI firm once considered Germany's national AI champion, in a deal designed to position the combined entity as a sovereign alternative to US-dominated AI providers.
Schwarz Group, the German retail conglomerate that owns supermarket chains Lidl and Kaufland and is a major Aleph Alpha shareholder, will invest $600 million in Cohere's upcoming Series E funding round as part of the transaction.
The round is expected to close later this year.
Cohere's existing shareholders will receive approximately 90% of shares in the combined company, with Aleph Alpha's shareholders taking the remaining 10%, according to German media reports.
The deal has not yet closed and remains subject to regulatory approval, and the overall financial terms of the acquisition were not disclosed.
Both the German and Canadian governments have endorsed the transaction.
Cohere has previously raised $1.6 billion from backers, including Nvidia and AMD and was valued at $7 billion in 2025.
Aleph Alpha has raised more than $600 million in investor and grant funding since its founding in 2019.
"Combining the strengths of Cohere and Aleph Alpha accelerates our global expansion and advances our mission to deliver sovereign AI to nations around the world," said Aidan Gomez, co-founder and chief executive of Cohere.
The combined entity will be anchored in both Germany and Canada and will target regulated sectors including the public sector, finance, defence, energy, manufacturing, telecommunications and healthcare.
Aleph Alpha originally built large language models before pivoting to deploying AI applications for enterprise and government clients, and its existing contracts with the German Ministry for Digital Affairs and the Baden-Württemberg regional government were a key attraction for Cohere.
"We are bringing Aleph Alpha into Cohere, and we are going to merge the two entities," Cohere chief financial officer Francois Chadwick told Reuters.
"We are going to commit to working with European infrastructure and maintain the sovereignty requirements that are being addressed in Europe."
The combined offering will be deployed on STACKIT, Schwarz Group's cloud platform, giving regulated European customers an alternative to US hyperscale providers.
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McKinsey estimates the market for AI services will surpass $1 trillion annually, with sovereign AI needs accounting for nearly $600 billion of that total.
"Together with Cohere, we are building a real counterweight for organisations that refuse to outsource control over their AI to a single provider or jurisdiction," said Ilhan Scheer, co-chief executive of Aleph Alpha.
The recap
- Cohere plans to acquire German AI company Aleph Alpha.
- Schwarz Group will invest $600 million in Cohere’s Series E.
- The acquisition has not closed and awaits regulatory clearance.
