Combined company will bear Cohere name with Aidan Gomez leading as CEO.
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, Cohere officially made the announcement this 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 USD, or approximately $27 billion CAD. 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.
While the two companies have described the deal publicly as a merger, a source familiar with the deal told BetaKit that, as the larger player, Cohere is buying Aleph Alpha. The source, speaking on condition of anonymity, 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.”
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.
A “big moment” for Canadian AI
Founded in 2019 by former Google researchers, Cohere is Canada’s horse in the foundation model race. It develops the large language models (LLMs) that power generative AI applications. Unlike some of its big-name competitors, Cohere has bet on specialized deployment of smaller, custom LLMs for businesses rather than chasing larger, “do-everything” frontier models.
Cohere has over 500 employees and was last valued at $7 billion USD in a funding round extension this past September. The company reportedly exceeded its revenue targets last year, hitting $240 million USD in annual recurring revenue. In October, Gomez signalled that the company could hit the public markets “soon,” and said he was targeting profitability by 2029.
Patrick Pichette, partner at Cohere investor Inovia Capital, told BetaKit in an email that the acquisition is “exactly the kind of strategic move that defines generational companies.”
“When we deepened our commitment to Cohere in 2025, we saw a team with the technology, the leadership, and the ambition to compete at the highest level,” Pichette said. “Cohere has always been a proof point that world-class AI can be built here, governed here, and scaled globally from here.”
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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.
The Canadian government has repeatedly broadcast its intention to make Cohere into “a Canadian champion” over the past year or so. Last year, it signed a memorandum of understanding with Cohere to deploy its AI tools across the public service. The agreement was built on the feds’ $240-million CAD investment 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.”
Consolidation in the AI sector
Together, 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.
“If you can meet privacy regulations in Germany, you can meet them anywhere else in the world.”
The Cohere deal could indicate the beginnings of some consolidation in the sector. This week, Elon Musk’s xAI also inked a collaboration agreement with AI coding startup Cursor. The deal gives xAI the option to acquire Cursor for $60 billion later this year. The two companies have also reportedly explored a three-way partnership with French AI startup Mistral to better compete against giants like Anthropic and OpenAI.
Pichette said the Cohere deal provides its own credible AI alternative in a market “increasingly defined by concentration,” and that the company now has the scale and institutional relationships to be an independent partner to governments and regulated industries.
Jon Ferguson, vice-president of Cyber and DNS at The Canadian Internet Registration Authority, told BetaKit in a Friday interview that it’s “refreshing” to see a Canadian business stay in Canadian hands. While entering Germany makes it “a bit more complex” for Cohere, he said it may be good for its global presence.
“From my days in the encryption space, they say if you can meet privacy regulations in Germany, you can meet them anywhere else in the world,” Ferguson said.
Earlier this month, Cohere chief AI officer Joelle Pineau had quashed concerns that Cohere would relocate to Germany, 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.