Cohere’s shareholders will receive approximately 90% of the combined entity; Aleph Alpha’s shareholders approximately 10%, making this effectively a Cohere acquisition in merger framing. The German government is set to become an anchor customer. Both digital ministers attended the Berlin announcement.
Cohere, the Toronto-based enterprise AI company, and Aleph Alpha, the Heidelberg-based German AI startup, announced on Friday that they have agreed to merge, creating what Handelsblatt described as a combined entity valued at approximately $20 billion.
The announcement was made in Berlin, with Germany’s Digital Minister Karsten Wildberger and Canada’s AI and Digital Innovation Minister Evan Solomon both in attendance, a staging that underscores the extent to which this is a geopolitical deal as much as a commercial one.
The share split reveals the real structure. Cohere’s shareholders are set to receive approximately 90% of the combined company; Aleph Alpha’s shareholders approximately 10%.
This is, in substance, a Cohere acquisition of Aleph Alpha, dressed in the language of merger to carry the political weight that both governments need. Aleph Alpha was valued at around €2.7 billion (~$3 billion) following its November 2023 fundraising round; Cohere was valued at approximately $7 billion during its most recent round in September 2025, with $240 million in annual recurring revenue.
The combined $20 billion valuation estimate from Handelsblatt reflects a meaningful premium over both companies’ last known marks, presumably justified by the synergistic value of the combined enterprise government customer base and the political support from two G7 governments.
The strategic logic is explicit and tied to the current geopolitical moment. Both Canada and Germany are alarmed by their dependence on a handful of American AI and cloud computing providers, an anxiety sharpened by trade tensions under President Trump and a broader reassessment of transatlantic technology dependencies.
Canada and Germany signed a Sovereign Technology Alliance earlier this year to deepen collaboration on building independent AI capacity. Cohere, founded in 2019 by Aidan Gomez, Ivan Zhang, and Nick Frosst out of the University of Toronto, has been a leading enterprise AI company focused on security, data privacy, and customisability.
Aleph Alpha, also founded in 2019 by Jonas Andrulis and Samuel Weinbach, pivoted from building its own large language models to focusing on helping corporate and government clients deploy AI regardless of which company built the underlying model, a systems integrator rather than a model lab.
The two companies are more complementary than overlapping. Cohere brings model development capability, $240 million in ARR, and an established enterprise customer base including Royal Bank of Canada, Fujitsu, and LG CNS. It also carries a strategic partnership with Microsoft and a recent MOU with Saab to advance AI technologies for the GlobalEye defence programme.
Aleph Alpha brings deep relationships with German public sector and government clients, regulatory expertise in the European market, and a brand that carries significant symbolic weight in the European AI sovereignty debate, it was backed by SAP, Bosch, Schwarz Gruppe, and Hubert Burda Media, and received strong endorsement from the German federal government during its 2023 fundraising.
The combined entity is intended to supply both businesses and public authorities with digital services as an alternative to US technology companies.
The German government’s role as an anchor customer is the deal’s most significant structural feature. A government anchor customer provides revenue visibility, procurement credibility, and political cover that no private investor can replicate.
For Cohere, which has been seeking to expand into European government markets, the anchor relationship gives it the entry point that would have taken years to build independently.
For the German government, which has struggled to articulate a coherent AI sovereignty strategy after Aleph Alpha’s own LLM ambitions were scaled back, the merger provides a plausible combined entity to point to as a non-American alternative.
Whether a company with 90% Canadian ownership and Toronto leadership genuinely qualifies as “European sovereign AI” is a question that European procurement rules and political definitions will eventually have to answer.
The combined company will face formidable competition. OpenAI, Anthropic, whose ARR has reached $30 billion, and Google are all aggressively targeting European enterprise and government customers. The Globe and Mail noted that even with the merger, “the new entity will still face huge challenges competing against deep-pocketed US rivals.”
What the Cohere-Aleph Alpha combination has that its American rivals do not is political legitimacy in a market where data residency, GDPR compliance, and freedom from the US Cloud Act are increasingly material procurement criteria.
The $20 billion valuation estimate, if it holds, would make the combined entity one of the most valuable AI companies in the world outside the United States, a symbolic milestone as much as a commercial one.
