It’s a move watched as much for its technological implications as for its diplomatic overtones. The Canadian startup Cohere will acquire its German counterpart Aleph Alpha, in a deal supported by the governments of both nations and valuing the combined group at roughly $20 billion.
The transaction price hasn’t been disclosed, but the deal structure speaks for itself: Cohere shareholders will own about 90% of the new entity, while Aleph Alpha’s holders will own roughly 10%.
A marriage between two challengers
The two companies share a common DNA: selling AI solutions to businesses and public administrations, betting on growing demand for secure, locally controlled systems.
Cohere, founded in 2019 in Toronto by former Google researchers, develops its LLMs and deploys them within the client infrastructure, including international groups such as LG, Fujitsu and Oracle. Its valuation reached $6.8 billion during its last funding round of $500 million, closed in August 2025.
Aleph Alpha, positioned as Germany’s answer to OpenAI, based in Heidelberg, has forged strong ties with industry and German institutions, but struck by the prohibitive cost of competing in the LLM race. In 2024, it pivoted strategically, abandoning large-scale model development to focus on bespoke AI applications for enterprises. The same positioning as Cohere.
600 million from Lidl for sovereign AI
The accompanying round illustrates the industrial and political scale of the project. Schwarz Group (the retail conglomerate that owns Lidl and Kaufland) has committed $600 million to Cohere’s upcoming financing round. This amount will be structured both as equity investment and as funding for research and development.
The group’s technology arm, Schwarz Digits, which already holds more than 20% of Aleph Alpha’s capital, will also supply its data centers in Germany to deploy the systems of the new entity, including an €11 billion facility planned near Berlin.
The funding round is expected to close in the coming months, according to Cohere’s chief financial officer, François Chadwick.
The new structure will operate under the name Cohere, with dual headquarters in Toronto and Germany.
A government-backed operation
Beyond the capital transaction, this is a strong geopolitical message that the two governments have chosen to carry forward. In Berlin, alongside Canada’s digital minister Evan Solomon and his German counterpart Karsten Wildberger, Cohere’s CEO Aidan Gomez laid out the ambition: “We want to ensure that governments and companies have an option between hyperscalers and hegemony.”
Wildberger went even further: “We need a different path for ourselves, a path different from the United States, one built through partnerships.” This statement aligns with the Canada–Germany Alliance for Sovereign Technologies, established in February at the Munich Security Conference.
The “new Cohere” aims at sectors as sensitive as energy, defense, finance, telecommunications, healthcare and the public sector. The German government, which is expected to become a stakeholder in the new entity, intends to prioritize sovereign AI solutions in its public procurement as it digitalizes its administrative services.
