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(Bloomberg) — Artificial intelligence developer Cohere Inc. has agreed to buy Aleph Alpha, a startup once considered Germany’s national AI champion, in a deal that includes a $600 million investment from German retailer Schwarz Group.
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Schwarz Group, a major Aleph Alpha shareholder that’s owned by German supermarket billionaire Dieter Schwarz, pledged to back Canada’s Cohere in its next financing round, the companies said in a statement Friday. They declined to share additional financial terms.
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“Built on the bedrock of shared Canadian and German values — where privacy, security, and responsible innovation are paramount — we are uniquely positioned to be the world’s trusted AI partner,” Cohere Chief Executive Officer Aidan Gomez said in the statement.
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Cohere and Aleph Alpha have pitched themselves as AI providers for governments and heavily regulated sectors, particularly those looking for alternatives to Silicon Valley technology. European officials have repeatedly called for the continent to decrease its reliance on American technology. Still, local competitors have trailed significantly behind companies like OpenAI and Anthropic PBC in growth and technical progress.
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The Financial Times reported that the combined group will be valued at around $20 billion. Cohere declined to comment on the figure.
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German digital minister Karsten Wildberger called the deal a critical step for ties with Canada. “We want to draw closer together technologically and economically,” he said at a press conference in Berlin with Gomez and a Schwarz Group executive. The acquisition “is not just a piece of paper, but also a driving force for genuine innovation and mutual appreciation.”
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The German government has previously championed Aleph Alpha as Europe’s answer to Silicon Valley on AI. The startup initially tried to take on OpenAI directly, building competing AI models and chatbots, before it pivoted to more customized services after struggling to gain traction.
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Founded in 2019, Cohere focuses on selling to businesses interested in customizable AI software. The Canadian startup, which counts Nvidia Corp. as a backer, was valued at $7 billion in a secondary tender offer in October.
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Schwarz is Germany’s richest person with a net worth of $45.6 billion, according to Bloomberg Billionaires Index. His Schwarz Group owns grocery chains Lidl and Kaufland and is increasingly devoting resources to tech. The secretive private firm has launched its own cloud-computing venture and is planning to develop AI data centers.
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It previously backed Aleph Alpha through its venture arm and related foundation Omega Ventures GmbH & Co. KG. According to the most recent corporate filings, Omega Ventures is the second-largest Aleph Alpha shareholder after Jonas Andrulis, the startup’s founder, who left as CEO last year.
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Deutsche Bank AG also invested in Aleph Alpha in 2024. The startup didn’t disclose its valuation at the time.
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—With assistance from Christina Kyriasoglou.
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