Cohere, Aleph Alpha combine to target enterprise AI market

Cohere, a Canadian AI model developer, and Aleph Alpha, a German company, have announced a definitive merger agreement, forming a new entity called Cohere. The combined business will be headquartered in Toronto, Canada, and Berlin, Germany, with Aleph Alpha's Heidelberg research office focusing on development. Ilhan Scheer, co-chief of Aleph Alpha, will become Chief Operating Officer of Cohere.

The merger aims to meet growing demand for AI systems that can operate within customers' own infrastructure while complying with local regulatory requirements. This focus on secure and governable AI systems is a significant departure from the companies' earlier work. Cohere's Command family of open-source AI models is designed to run inside customers' computing environments, positioning the company to serve businesses, governments, and public administrations rather than consumers.

Aleph Alpha, once a leading German AI innovator, is shifting its focus to AI integration software. The company's co-founder, Jonas Andrulis, left the organization earlier this year after stepping down as CEO in 2025. The combined business is valued at approximately $20 billion (€17.34 billion), with Schwarz Group, owner of the Lidl supermarket chain, investing €500 million in the new entity. The deal remains subject to regulatory approvals.

This strategic partnership comes as European AI companies attract fresh investment. Mistral, Europe's leading model maker, recently raised €3 billion at a valuation of over €21 billion. Cohere currently generates $240 million in annual recurring revenue, while Aleph Alpha reported less than €1 million in revenue in 2023. The companies plan to provide computing capacity through Schwarz Group's cloud arm, StackIT, as the retailer invests between €11 billion and €13 billion in a German data-center campus expected to house up to 100,000 AI chips.