The deal’s key financial backer is Schwarz Group, a German retail conglomerate. As an existing shareholder in Aleph Alpha, it is already fully onboard with the acquisition. And going forward, it will also become a strategic backer of the newly combined entity with €500 million in structured financing (approximately $600 million). In return, Schwarz Group expects the new entity to run on STACKIT — the sovereign cloud platform operated by its IT division, Schwarz Digits — giving the retail giant a major enterprise customer for its cloud business.

To fund the combined entity, Cohere is also raising a new round of financing — a Series E — and Schwarz Group will serve as its lead investor. The valuation has already been set: According to German business media outlet Handelsblatt, the term sheet pegs the company’s combined worth at around $20 billion.

This would be a significant leap that combined revenue alone can’t justify. While Cohere reported $240 million in annual recurring revenue in 2025, Aleph Alpha had previously generated little revenue and significant losses. But investors are betting that teaming up will improve their odds against much larger rivals.

They may not be alone in the thinking that consolidation is the path forward. Elon Musk’s AI startup xAI has reportedly discussed a three-way partnership with France’s Mistral AI and Cursor, which SpaceX recently secured the option to buy. But it remains unclear whether Mistral would be interested in risking undermining its positioning as an alternative to U.S. tech that boosted its revenues. A partnership with xAI — an American company — would complicate that identity.