Canada’s Cohere and Germany’s Aleph Alpha have signed a definitive merger agreement to combine their businesses and expand their presence in the enterprise artificial intelligence market. The combined company will operate under the Cohere name, with headquarters in Toronto and Berlin, while Aleph Alpha’s Heidelberg office will focus on research.

Aleph Alpha co-chief Ilhan Scheer will join Cohere as chief operating officer. The companies said the merger is aimed at meeting growing demand from businesses and governments for AI systems that can run within their own infrastructure while meeting local regulatory requirements. The deal was previously valued at around $20 billion, although updated financial terms were not disclosed.

Schwarz Group, the owner of Lidl, will invest €500 million in the combined company and provide computing capacity through its cloud arm, StackIT. Schwarz is investing up to €13 billion in a German data-centre campus expected to accommodate as many as 100,000 AI chips. The merger remains subject to regulatory approval.

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