Cohere acquires Aleph Alpha with €500 million backing from Schwarz Group, targeting $20 billion valuation to build European AI alternative to U.S. dominance

Canadian AI startup Cohere is taking over Germany-based Aleph Alpha with support from Schwarz Group (owner of grocery chain Lidl). Schwarz Group is investing €500 million (approximately $600 million) in structured financing and leading Cohere's Series E funding round, which values the combined entity at around $20 billion — a jump from Cohere's previous $6.8 billion valuation.

The merged company will combine Cohere's strength in large language models (AI systems that understand and generate text) with Aleph Alpha's expertise in smaller, specialized models tailored to European languages and regulated industries. Cohere generated $240 million in annual recurring revenue in 2025; Aleph Alpha had minimal revenue but brings 250 employees and enterprise-focused tools like the PhariaAI suite.

Enterprises in regulated sectors — defense, energy, finance, healthcare, manufacturing, telecommunications — now have a European-controlled AI option that doesn't route data through U.S. servers, addressing privacy concerns that were driving customers away from OpenAI and similar U.S. providers. The deal has backing from both German and Canadian governments, framed as part of a broader 'Sovereign Technology Alliance' to reduce dependency on American AI vendors.

The merger closes subject to regulatory and shareholder approval; Schwarz Group's participation includes expected use of STACKIT, its sovereign cloud service, to host the combined entity's operations.