File photo: Aidan Gomez, co-founder and CEO of Cohere, speaks at Toronto Tech Week. – Photo courtesy Toronto Tech Week<\/p>\n
Two of the most prominent AI companies outside the United States are joining forces. <\/p>\n
Cohere<\/a>, the Toronto-based enterprise AI firm founded in 2019, is acquiring Aleph Alpha<\/a>, a German company founded the same year and once positioned as Germany\u2019s answer to OpenAI.<\/p>\n The deal, endorsed by the Canadian and German governments, was announced Friday in Berlin and aims to give enterprise and public sector customers a credible alternative to American AI dominance.<\/p>\n Cohere focused on building enterprise AI tools for businesses and governments, winning federal investment, government contracts, and commercial partnerships with companies like Bell and RBC along the way. <\/p>\n Aleph Alpha has taken a different path. After failing to keep pace with OpenAI and Anthropic on foundation model development, it abandoned that race and pivoted to helping governments and enterprises deploy AI they could control.<\/p>\n The combination brings those two stories together into a single company pitched as a transatlantic answer to Silicon Valley AI giants.<\/p>\n Financial terms of the acquisition were not disclosed by the companies. <\/p>\n German business daily Handelsblatt, which first reported the deal<\/a>, valued the combined entity at roughly $20 billion, citing sources in government and industry. <\/p>\n Germany\u2019s Digital Minister Karsten Wildberger announced the transaction at a press conference in Berlin on Friday<\/a>, joined by Canada\u2019s Minister of AI and Digital Innovation Evan Solomon, Cohere CEO Aidan Gomez, Schwarz Digits chief Rolf Schumann and Aleph Alpha co-founder Samuel Weinbach. <\/p>\n German Chancellor Friedrich Merz approved the deal, according to Handelsblatt.<\/p>\n The deal<\/p>\n Cohere will retain its name and operate dual headquarters in Canada and Germany, with Heidelberg becoming a second global headquarters. <\/p>\n Cohere shareholders will hold about 90% of the combined entity, with Aleph Alpha shareholders taking about 10%, according to Handelsblatt. <\/p>\n The acquisition is subject to regulatory approval.<\/p>\n Alongside the announcement, Germany\u2019s Schwarz Group committed \u20ac500 million<\/a> to Cohere\u2019s upcoming Series E round. Schwarz, parent company of discount retailers Lidl and Kaufland, was already a lead backer of Aleph Alpha. <\/p>\n Cohere CFO Francois Chadwick told Reuters<\/a> the company expects to close the funding round in the coming months.<\/p>\n The combined company will target regulated sectors including public services, finance, defence, energy, manufacturing, telecommunications and healthcare. Both the Canadian and German governments said they would use Cohere technology.<\/p>\n Cohere has raised about $1.6 billion since its founding, with investors including Nvidia and AMD. Its most recent valuation was roughly $6.8 billion after a $500 million raise in August 2025. <\/p>\n That\u2019s a fraction of what OpenAI, Anthropic and Google have mobilized for training infrastructure, talent and chip supply. <\/p>\n Aleph Alpha\u2019s pivot away from foundation model development brought its business model closer to Cohere\u2019s. Its existing contracts with the German federal ministry for digital affairs and the Baden-W\u00fcrttemberg regional government give Cohere a direct foothold in European public sector procurement.<\/p>\n What this means for Canadian technology leaders<\/p>\n At the press conference, Solomon framed the deal as a stand against concentrated power. <\/p>\n \u201cWe need to make sure that the power does not rest in the hands of a few dominant players,\u201d he said. Wildberger said the two countries were \u201ccreating a global AI leader.\u201d<\/p>\n The announcement builds on the Sovereign Technology Alliance that Canada and Germany signed earlier this year<\/a>.<\/p>\n It also extends a visible stretch of Canadian government support for Cohere. <\/p>\n Ottawa finalized a $240 million investment in March 2025 to help fund Cohere\u2019s $725 million data centre project in Cambridge, Ontario. In August 2025, the federal government signed a memorandum of understanding with Cohere to explore deploying its tools across public service operations.<\/p>\n Commercial momentum has followed. Bell Canada announced its own partnership with Cohere last July<\/a>, making it Cohere\u2019s preferred Canadian infrastructure partner. Last week, Innovation, Science and Economic Development Canada began rolling out Cohere\u2019s North platform<\/a> to up to 1,400 staff.<\/p>\n