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Cohere and Aleph Alpha Sign Merger Agreement in Deal Reported at $20 Billion

Cohere and Aleph Alpha signed a merger agreement, formalizing an April plan for a combined enterprise AI company reported to be worth $20 billion, with dual headquarters in Toronto and Berlin.

AI News Feed · 2026-09-17 09:21

When the plan was announced in April, the companies said German retailer Schwarz Group GmbH intended to provide €500 million, or about $573 million, in financing. Last week, The Global and Mail reported that a consortium backed by the Canadian government could invest another $3 billion. Neither figure was confirmed in Wednesday's announcement.

Cohere, based in Toronto, builds artificial intelligence models for the enterprise market. Its portfolio is led by a family of open-source large language models called Command, alongside more specialized algorithms optimized for tasks such as translation and search. Its newest model, Parse, converts documents into a format that AI agents can process. The company sells access to its models through an application programming interface and offers an AI productivity service called North. According to CNBC, Cohere's revenue reached $240 million last year. The company was valued at $7 billion last September; the business set to emerge from the merger is reportedly worth $20 billion, which would imply that investors expect the combination to open significant growth opportunities.

Aleph Alpha, based in Germany, develops small language models for enterprises and government agencies. The company says its engineers build custom evaluation benchmarks to verify that its algorithms perform as intended, and it assists customers with follow-on work such as deploying models in production. It pursues foundational AI research alongside commercial projects: last year it introduced a library that it said can double the inference performance of large language models, and more recently it detailed a new approach to preventing hallucinations in retrieval-augmented generation systems. Aleph Alpha has raised about $126 million in venture funding, with backers including Schwarz Group, the retailer that plans to support the merger with the $573 million investment.

Once the deal clears regulators, the two companies intend to operate under Cohere's brand. The combined organization will maintain dual headquarters in Berlin and Toronto, while Aleph Alpha's current headquarters in Heidelberg will run as an AI research center.

Cohere said one priority for the combined company will be to establish a broader partnership with Schwarz Group. The retailer operates a cloud unit called STACKIT that hosts AI workloads and other applications for third-party organizations. Last year, Schwarz Group announced plans to spend €11 billion on a new data center designed to host up to 100,000 graphics processing units.