Why Cohere is merging with Aleph Alpha

Canadian AI startup Cohere is taking over Germany-based Aleph Alpha, with the blessing of their governments, in a bid to offer a sovereign alternative to enterprises in an AI landscape dominated by American players. “Sovereign AI” refers to systems where companies and governments retain full control over their own data — rather than routing it through U.S. tech giants like Microsoft or Google. As companies that develop large language models, Aleph Alpha and Cohere have been hometown stars, while still lagging far behind OpenAI and the likes globally. But similarities aside, this isn’t an alliance between equals. Last valued at $6.8 billion , Cohere will lead the new entity that will incorporate Aleph Alpha, subject to approval by authorities and shareholders. The deal’s key financial backer is Schwarz Group, a German retail conglomerate. As an existing shareholder in Aleph Alpha, it is already fully onboard with the acquisition. And going forward, it will also become a strategic backer of the newly combined entity with €500 million in structured financing (approximately $600 million). In return, Schwarz Group expects the new entity to run on STACKIT — the sovereign cloud platform operated by its IT division, Schwarz Digits — giving the retail giant a major enterprise customer for its cloud business. To fund the combined entity, Cohere is also raising a new round of financing — a Series E — and Schwarz Group will serve as its lead investor. …