Cohere, Aleph Alpha combine to target enterprise AI market

(Corrects from "this year" to "last year" ‌in para 9)

By ​Leo ​Marchandon

Sept 16 (Reuters) - Canada's Cohere and Germany's Aleph Alpha signed a definitive merger agreement on Wednesday, the AI companies said.

The combined business will operate ‌as Cohere, with dual headquarters in Toronto and Berlin, while Aleph Alpha's ⁠Heidelberg office will focus on research. Aleph Alpha co-chief Ilhan Scheer will become chief operating officer ‌of Cohere.

The merger brings together ‌a Canadian AI model developer and a German company that has increasingly focused on helping governments and businesses deploy artificial intelligence. The companies said demand was growing ​for AI systems that can operate within a customer's own infrastructure and comply with local regulatory requirements.

Cohere CEO Aidan Gomez said the tie-up aimed to meet ⁠demand for AI "powerful enough to compete, but secure and governable enough to trust."

The plan was first disclosed in April, ​a combination valued at around $20 billion (€17.34 billion) at the time. Lidl-owner Schwarz Group is investing €500 million in the new entity. The companies ​did not disclose updated financial terms and said ‌the transaction remained subject to regulatory approvals.

The deal comes as European AI companies attract fresh investment. Mistral, Europe's lead model maker, ⁠last week raised €3 billion at a valuation of more than €21 billion.

Cohere develops Command, a family of open source AI models designed to run inside a customer's own computing environment, positioning the company ⁠to serve businesses, governments and public administrations rather than consumers.

Aleph Alpha, once touted as Germany's AI ​champion, stepped back from developing frontier AI models and refocused on AI integration software. Co-founder Jonas Andrulis left the company earlier this year after relinquishing the chief executive role in 2025.

Cohere ‌reported $240 million in annual recurring revenue last year, while Aleph Alpha reported revenue of less than 1 million euros in 2023, ‌according to its latest public accounts.

The companies said Schwarz Group would provide computing capacity through ⁠its cloud arm StackIT. The retailer ‌is investing between €11 billion and €13 ​billion in a German data-centre campus expected to house up to 100,000 AI chips.

(1 euro = $1.1535)

(Reporting by Leo Marchandon in Gdansk; Editing by ‌Matt Scuffham)

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