Cohere has agreed to acquire Germany’s Aleph Alpha in a tie-up valuing the combined group at roughly $20bn. Backed by the Canadian and German governments, the merged entity will focus on sovereign AI systems letting customers retain full data and infrastructure control. Cohere keeps its name, operates with dual headquarters in Canada and Germany, and exchanges one share for every nine Aleph Alpha held.

Schwarz Digits, the technology arm of retailer Schwarz Group which owns Lidl, leads a fresh funding round with $600mn in equity and research commitments, including equity and research funding. It holds over 20% stake in Aleph Alpha and is building an €11bn Berlin data center to support the merged group’s workloads.

The tie-up reflects a broader push by middle powers to collaborate amid US-China tech dominance. Germany will act as an anchor customer, prioritizing sovereign AI in public procurement. Cohere was valued at $6.8bn in a 2023 funding round, while Aleph Alpha was worth roughly €500mn in 2023. Both firms focus on deploying AI within clients’ own infrastructure, a direct challenge to hyperscaler hegemon models.