Canada-based Cohere is merging with Germany-based Aleph Alpha after nearly a year of talks regarding the acquisition.

The transatlantic alliance, which will be anchored in both Germany and Canada, will combine Cohere's global AI scale with Aleph Alpha's research and institutional relationships, a press release stated. 

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The combined offering will focus on customized deployments for areas such as public sector work, finance, defense, energy, manufacturing, telecom and health care.

"Combining the strengths of Cohere and Aleph Alpha accelerates our global expansion and advances our mission to deliver sovereign AI to nations around the world," said Aidan Gomez, co-founder and CEO of Cohere.

A McKinsey report noted that "the market for AI services is projected to surpass $1 trillion annually, with sovereign AI needs representing nearly $600 billion of that total."

"The partnership uniquely bridges the gap between these segments with its sovereign-first approach, capturing the critical intersection where sovereignty requirements meet broad enterprise AI adoption," the press release continued.

As part of the plan, the companies said they will work with Schwarz Group companies to deliver the sovereign setup through STACKIT, a Schwarz Digitscloud platform. 

In addition, the companies of Schwarz Group plan to back Cohere's upcoming Series E funding as a lead investor with a $600 million structured financing commitment. The round is understood to have attracted strong interest from leading investors, the company stated.

In a joint statement, Rolf Schumann and Christian Müller, co-CEOs of Schwarz Digits, said: "With this investment, the companies of Schwarz Group position themselves as lead investors for digital sovereignty and infrastructure. Building this infrastructure is a strategic necessity to help shape the AI revolution based on values such as trust, fairness, and responsibility.”

“The establishment of STACKIT, Schwarz Digits' sovereign cloud infrastructure, as the technical backbone of this transatlantic AI initiative, empowers organizations to strengthen their digital independence and maintain control over their data. This is true leadership in digital sovereignty," the co-CEOs added.

It was previously reported the merger will have the support of Berlin, as the German government would be interested in becoming a "key customer" of the combined company.

Aleph Alpha told Reuters that it routinely holds discussions about potential strategic partnerships, as is common across the AI sector, and emphasized that it maintains an independent strategy.

Founded in 2019, Cohere specializes in Large Language Models (LLMs) and generative AI with a specific focus on serving the enterprise market. The company builds AI technology tailored for businesses, focusing on security, data privacy and customizability.

Aleph Alpha, also founded in 2019, specializes in developing sovereign, explainable and reliable LLMs and multimodal AI tailored for complex, mission-critical applications in regulated industries like public administration, defense, and manufacturing.

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