Cohere and Aleph Alpha Merge to Form $20B AI Giant

Shareholders of Cohere will hold roughly 90% of the new entity, while Aleph Alpha’s investors will own about 10% , a structure that makes this effectively a Cohere acquisition framed as a merger. The German government is set to become an anchor customer, and both countries’ digital ministers attended the announcement in Berlin.

Cohere, the Toronto-based enterprise AI firm, and Aleph Alpha, the Heidelberg-based German AI startup, announced on Friday that they have agreed to combine. According to Handelsblatt, the merged company is valued at approximately $20 billion.

The Berlin announcement featured Germany’s Digital Minister Karsten Wildberger and Canada’s AI and Digital Innovation Minister Evan Solomon, signaling that this is as much a geopolitical move as a commercial one.

The ownership split reveals the true nature of the deal. Cohere’s shareholders will receive about 90% of the combined business, and Aleph Alpha’s shareholders around 10%. This is, in practice, a Cohere acquisition of Aleph Alpha, wrapped in merger language to satisfy the political needs of both governments. Aleph Alpha was valued at roughly €2.7 billion (~$3 billion) after its November 2023 funding round, while Cohere was valued at about $7 billion during its most recent round in September 2025, with $240 million in annual recurring revenue.

The $20 billion valuation estimate from Handelsblatt represents a significant premium over both companies’ last known valuations. This premium is likely justified by the combined enterprise and government customer base, plus political backing from two G7 nations.

The strategic rationale is clear and rooted in current geopolitical realities. Both Canada and Germany are worried about their reliance on a handful of American AI and cloud providers , a concern heightened by trade tensions under President Trump and a broader reevaluation of transatlantic tech dependencies.

Earlier this year, Canada and Germany signed a Sovereign Technology Alliance to deepen collaboration on building independent AI capacity. Cohere, founded in 2019 by Aidan Gomez, Ivan Zhang, and Nick Frosst out of the University of Toronto, has focused on enterprise AI with an emphasis on security, data privacy, and customizability.

Aleph Alpha, also founded in 2019 by Jonas Andrulis and Samuel Weinbach, shifted from building its own large language models to helping corporate and government clients deploy AI regardless of the underlying model. It now acts more as a systems integrator than a model lab.

The two companies are more complementary than competing. Cohere brings model development expertise, $240 million in ARR, and an established enterprise client base that includes Royal Bank of Canada, Fujitsu, and LG CNS. It also has a strategic partnership with Microsoft and a recent MOU with Saab to advance AI for the GlobalEye defense program.

Aleph Alpha contributes deep relationships with German public sector and government clients, regulatory knowledge of the European market, and a brand that carries significant weight in the European AI sovereignty debate. It was backed by SAP, Bosch, Schwarz Gruppe, and Hubert Burda Media, and received strong endorsement from the German federal government during its 2023 fundraising.

The merged entity aims to supply both businesses and public authorities with digital services as an alternative to US tech companies.

The German government’s role as an anchor customer is the deal’s most critical structural element. A government anchor customer provides revenue visibility, procurement credibility, and political cover that no private investor can match.

For Cohere, which has been looking to expand into European government markets, this anchor relationship offers an entry point that would have taken years to build on its own.

For the German government, which has struggled to define a coherent AI sovereignty strategy after Aleph Alpha’s own LLM ambitions were scaled back, the merger provides a plausible combined entity to point to as a non-American alternative.

Whether a company with 90% Canadian ownership and Toronto leadership can truly be considered “European sovereign AI” is a question that European procurement rules and political definitions will eventually have to address.

The combined company will face intense competition. OpenAI, Anthropic (whose ARR has reached $30 billion), and Google are all aggressively targeting European enterprise and government customers. The Globe and Mail noted that even with the merger, “the new entity will still face huge challenges competing against deep-pocketed US rivals.”

What the Cohere-Aleph Alpha combination has that its American competitors do not is political legitimacy in a market where data residency, GDPR compliance, and freedom from the US Cloud Act are increasingly important procurement criteria.

The $20 billion valuation estimate, if it holds, would make the combined entity one of the most valuable AI companies outside the United States , a symbolic milestone as much as a commercial one.