Toronto-based AI scaleup Cohere announced Friday morning it will join forces with Germany’s Aleph Alpha to create a “transatlantic AI powerhouse.”
Following weeks of talks between the two companies, first reported by German newspaper Handelsblatt, Cohere officially made the announcement Friday morning. The company said in a news release that the merger will combine Cohere’s global AI scale with Aleph Alpha’s “research excellence” and institutional relationships. The combined company will be “anchored in Germany and Canada.”
Gomez said that the deal is “built on the bedrock of shared Canadian and German values.”
Financial terms of the deal were not disclosed, but The Financial Times reported that the joint entity would be valued at around $20 billion. The combined company will bear the Cohere name, with Cohere co-founder and CEO Aidan Gomez leading as CEO. Its global headquarters will be located in Toronto and its European headquarters will be based in Germany, complementing Cohere’s existing Paris office.
Speaking on condition of anonymity, a source familiar with the deal told BetaKit that as the larger player, Cohere is buying Aleph Alpha. The source said Cohere will stay majority Canadian-controlled and owned and its intellectual property will remain in Canada post-transaction.
The deal remains subject to the approval of Aleph Alpha shareholders and regulators, including the German government and potentially the European Union.
The acquisition intends to address the market for sovereign AI, where countries have control over their own AI data without influence from other jurisdictions.
“Together, we will give enterprises and governments across Canada, Europe, and the world the technology to move from exploration to rapid, secure implementation, with the absolute certainty that their data remains their own,” Gomez said in a news release.
Aleph Alpha co-CEO Ilhan Scheer said in the release that the two companies are “building a real counterweight for organizations that refuse to outsource control over their AI to a single provider or jurisdiction.”
Cohere, which has over 500 employees, was last valued at $7 billion USD in a funding round extension this past September.
As part of the deal, German retail conglomerate and Aleph Alpha shareholder Schwarz Group has pledged to invest 500 million euros ($800 million CAD) in and lead an upcoming Series E round in the combined company.
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Gomez said that the deal is “built on the bedrock of shared Canadian and German values,” of privacy, security, and responsible innovation, making the combined company uniquely positioned to be the world’s trusted AI partner.
Last year, Cohere signed a memorandum of understanding with the Canadian government to deploy its AI tools across the public service. In December 2024, the federal government invested $240 million CAD into Cohere’s multibillion-dollar Canadian AI data centre project.
In a statement to BetaKit, Canada’s minister of AI Evan Solomon called the combination “a big moment for Canadian AI.”
“Cohere is Canadian-founded, Canadian-headquartered, and built on Canadian research excellence,” Solomon said. “As countries look for secure, responsible, enterprise-grade AI, a Canadian-headquartered company is helping lead that future.”
When combined, Cohere and Aleph Alpha plan to deliver secure AI to highly regulated and public sectors, such as finance, defence, energy, manufacturing, telecommunications, and healthcare. The combined entity will also partner with Schwarz Group to deploy a sovereign offering on its cloud service STACKIT.
When reports of the combination talks became public, Cohere chief AI officer Joelle Pineau quashed concerns that Cohere would relocate, saying the company “will always remain headquartered” in Canada.
Gomez said last June during Toronto Tech Week that Cohere is “not for sale,” adding that, “Any sort of exit that would take us out of Canada is only if we fail, and we haven’t failed. I think acquisition is failure; it’s ending this process of building.”
With files from Madison McLauchlan and Josh Scott.
Feature image courtesy ALL IN.