Cohere Acquires Aleph Alpha in $20B Deal, Schwarz Group Invests $600M

Quick Facts

• Cohere acquires Aleph Alpha with combined valuation reaching $20 billion, nearly triple Cohere’s previous $7 billion valuation
• Schwarz Group, owner of Lidl and Kaufland retailers, invests $600 million in Cohere’s upcoming funding round
• Deal targets sovereign AI market projected to reach $600 billion by 2030 as governments seek alternatives to US tech giants

Toronto-based AI startup Cohere is acquiring German competitor Aleph Alpha in a deal that values the combined company at around $20 billion. The acquisition comes with $600 million in new funding from Schwarz Group, the retail giant that owns Lidl and Kaufland supermarket chains.

Under the merger structure, Cohere shareholders will retain 90 percent ownership while Aleph Alpha shareholders receive 10 percent. The deal has not yet closed and remains subject to regulatory approval. Cohere CEO Aidan Gomez will lead the combined entity, which will maintain global headquarters in Toronto and European headquarters in Berlin.

“We are uniting under the Cohere brand to create a global and independent AI powerhouse,” Gomez said. “Organizations globally are demanding uncompromising control over their AI stack.”

Both companies launched in 2019 to build large language models with a focus on privacy and customer data control. Aleph Alpha initially positioned itself as Germany’s answer to OpenAI but pivoted to specialized business applications after founder Jonas Andrulis departed last year.

The merger targets the rapidly expanding sovereign AI market. McKinsey analysis suggests this sector could represent $600 billion by 2030, driven by public sector and regulated industry demand for AI systems under local control rather than foreign jurisdiction.

“Together with Cohere, we are building a real counterweight for organizations that refuse to outsource control over their AI to a single provider or jurisdiction,” said Ilhan Scheer, Aleph Alpha co-CEO.

The combined entity will deploy sovereign AI offerings on STACKIT, Schwarz Group’s cloud infrastructure platform. Schwarz operates four European data centers and is constructing an $17.6 billion facility in Germany scheduled for completion by late 2027.

Cohere has raised approximately $1.6 billion from investors including Nvidia since 2019. The company’s previous valuation stood at $7 billion in 2025. Aleph Alpha secured more than $600 million in funding and maintains commercial contracts with German government agencies including the ministry for digital affairs.

The deal enjoys support from Canadian and German governments, with representatives from both countries expected to attend the formal announcement in Germany. Canadian AI Minister Evan Solomon endorsed the transaction, stating: “We need alternatives to the hyperscalers and the hegemons.”

Despite the significant valuation, the merged company remains smaller than competitors OpenAI and Anthropic. Gomez emphasized a different competitive strategy: “We’re never going to spend the most money. That’s not how we compete. But we will create the most scalable and secure technology in the category.”

The acquisition reflects broader geopolitical trends toward digital sovereignty as European institutions seek alternatives to American technology providers for sensitive AI applications.

Read more: AI startups Cohere, Aleph Alpha to merge with $600M in new funding