Cohere and Aleph Alpha agree to merge in reported $20B deal

Artificial intelligence firms Cohere Inc. and Aleph Alpha GmbH have signed a merger agreement that formalizes a deal announced in April. The upcoming business will be valued at $20 billion, suggesting significant growth opportunities for investors. German retailer Schwarz Group GmbH is planning to provide the merged company with €500 million, or about $573 million, in financing. Canadian government-backed investors could contribute an additional $3 billion to the deal.

Cohere, based in Toronto, specializes in developing artificial intelligence models for the enterprise market. Its product line includes open-source large language models called Command, as well as more specialized algorithms optimized for tasks like translation and search. The company's newest model, Parse, converts documents into a format easily processed by AI agents. Cohere generates revenue by selling access to its models via an application programming interface, along with an AI productivity service named North.

Aleph Alpha, headquartered in Germany, focuses on developing small language models for enterprises and government agencies. The company employs custom evaluation benchmarks to verify the performance of its algorithms. Aleph Alpha also assists customers in deploying models in production. Earlier this year, the firm unveiled a library capable of doubling the inference performance of large language models. It has raised approximately $126 million in venture funding, with investors including Schwarz Group.

Following the merger, the combined organization will continue to operate under Cohere's brand. The new entity will maintain its dual headquarters in Berlin and Toronto, with Aleph Alpha's German headquarters in Heidelberg serving as an AI research center. Cohere anticipates that one of the merged company's priorities will be establishing a broader partnership with Schwarz Group. The retailer has plans to invest €11 billion in a new data center housing up to 100,000 graphics processing units.