Cohere Signs for Aleph Alpha as Schwarz Group Puts In €500 Million

Cohere and Aleph Alpha signed a definitive merger agreement on 16 September 2026, five months after announcing their plan in April. The combined company will operate as Cohere, with headquarters in Toronto and Berlin, and will keep Aleph Alpha's Heidelberg office as a research centre, Cohere said. Headcount will rise above 1,000. Reuters reported that Schwarz Group, the owner of Lidl, is investing €500 million in the new entity. Neither company disclosed updated financial terms, and the transaction still needs regulatory approval. Cohere expects it to close later this year.

Two Aleph Alpha executives will join Cohere's leadership when the deal closes. Co-chief executive Ilhan Scheer becomes chief operating officer, and co-founder Samuel Weinbach becomes chief research officer. Aidan Gomez will lead the combined business, The Logic reported.

Two very different balance sheets

The revenue line is the awkward one. Reuters reported that Cohere has $240 million in annual recurring revenue this year, while Aleph Alpha's latest public accounts show revenue of less than €1 million for 2023. When the plan was disclosed in April, Reuters put the value of the combination at around $20 billion, more than 80 times Cohere's recurring revenue. Aleph Alpha, once promoted as Germany's AI champion, stepped back from developing frontier models to focus on integration software, and co-founder Jonas Andrulis left the company earlier this year, according to Reuters.

The retailer is the prize

The honest reading is that Cohere is buying a German legal and political home, a public-sector customer base and a closer tie to Schwarz Group, and that the last of these may matter most. Reuters reported that Schwarz is investing between €11 billion and €13 billion in a German data-centre campus expected to house up to 100,000 AI chips, and that it will provide computing capacity to the merged company through its cloud arm, STACKIT. Cohere's announcement calls STACKIT a cornerstone of Europe's digital sovereignty strategy, and The Logic reported that Cohere has already committed to use STACKIT capacity for its European cloud needs.

Compute is the constraint Gomez keeps coming back to. Speaking to The Logic on 15 September, he acknowledged that Cohere's models trail those of the frontier labs, particularly in coding and cybersecurity: "There's a gap today, and we want to work to close that." He said Cohere is scaling its models up sharply and trying to secure processing power in Canada and Germany, adding: "We're sprinting and trying to lock down compute as quickly as possible."

Selling control rather than capability

Control is the pitch, and capability comes second. Cohere says the combined company will operate within the legal frameworks of both countries for sensitive data and technology, with safeguards and oversight built into its structure. The target customers are governments and regulated industries that want to run models inside their own infrastructure. Cohere already lets clients run its models and its North agent platform on their own hardware, which the company says means it cannot use their data for training, according to The Logic. Gomez's line for the merger, quoted by Reuters, is AI "powerful enough to compete, but secure and governable enough to trust."

The market for that promise is getting crowded and better funded. Mistral raised €3 billion at a valuation of more than €21 billion last week, Reuters reported on 16 September, which puts Cohere's Schwarz money at a sixth of its French rival's latest round.

Politics is supplying a tailwind. The agreement was signed on the day Canada's AI minister, Evan Solomon, and Germany's digital minister, Karsten Wildberger, appeared together at the ALL IN conference in Montréal, where the two governments also committed up to CAD 300 million to Yoshua Bengio's non-profit LawZero. CBC News quoted Vass Bednar, managing director of the Canadian Shield Institute, describing the merger as "arguably capacity building".

The case against the sceptical reading is that Aleph Alpha's value may sit in contracts and relationships that 2023 accounts do not capture, and its revenue since then has not been published. The companies have also not said how Aleph Alpha's German public-sector work will carry over, and without updated terms it is not possible to say what Cohere is paying for the German half. Regulators have yet to approve the deal.