17MAY

Aleph Alpha merger stalls on Berlin

2 min read

14:28UTC

Handelsblatt reported on 3 July that the €20bn Cohere-Aleph Alpha tie-up has stalled on employee transfers, leadership and German protective-rights terms.

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Key takeaway

Germany's sovereignty conditions are stalling the merger they were meant to secure.

The Cohere-Aleph Alpha merger is running behind schedule, Handelsblatt reported on 3 July ¹. Cohere is a Canadian enterprise-AI firm; Aleph Alpha is Germany's best-funded sovereign-AI developer, and the deal was announced in April at a roughly $20bn valuation with a €500m anchor from the retail-and-tech conglomerate Schwarz Group .

Three points remain unresolved: the scope of employee transfers to Cohere, the leadership of the merged company, and the design of German-government protective rights. Berlin drives the third. It wants sovereignty guarantees written as enforceable deal terms, and turning a political promise into golden-share-style control that Cohere's Canadian and US investors will also accept is proving slow. All parties say they "continue working constructively" ².

Infineon's fab opened months early on public co-funding, yet the €20bn merger Berlin is anchoring still cannot close on the legal fine print. Building a champion by consolidation is proving harder than building one in concrete, because the sovereignty condition has to survive three countries' company law at once.

Deep Analysis

In plain English

Cohere is a Canadian company that makes AI models for businesses; Aleph Alpha is Germany's answer, backed by Berlin and the retail group behind Lidl. The two agreed to merge back in April, but the deal still has not closed. Berlin is holding up the deal because it wants a guaranteed say over the combined company, even though most of its owners will be Canadian and American investors, and lawyers are struggling to write that guarantee into a contract all three countries' regulators will accept.

Deep Analysis

Root Causes

Any protective-rights clause enforceable under German law has to survive review by the Bundeskartellamt and the Canadian Competition Bureau at once, and each authority applies its own test for what a government veto is allowed to do inside a private company's governance.

Germany has no standing legal template for a minority-government protective right sitting inside a foreign-majority AI company. The closest precedent, the Foreign Trade and Payments Act screening that blocked a Chinese-linked buyout of chipmaker Elmos in 2023, operates as an outright veto on a sale rather than an ongoing governance right, which is the structure Berlin is now trying to build from scratch.

Source Landscape

This story draws on centre-leaning sources from Germany

Germany

LeftRight

Primary parallel: The 2000 merger creating EADS, combining Aerospatiale-Matra, DASA and CASA, took over a year to formalise because the French and German governments each demanded a golden share and board veto before signing off, the same tension between commercial closing speed and state protective rights now stalling Cohere-Aleph Alpha.

Counter-parallel: Nokia's 2015 acquisition of Alcatel-Lucent, a comparably cross-border European tech deal, closed within ten months with no government golden share attached, showing that state protective-rights conditions, not deal complexity itself, are the variable adding time.

Consensus view: DigitalEurope's Cecilia Bonefeld-Dahl frames the stall as typical of state-linked European tech mergers since 2022, arguing that protective-rights drafting now routinely runs months regardless of deal size once a national government insists on an enforceable veto rather than a consultation right.

Counter-view: The Cato Institute's technology-policy team argues Berlin's demand for enforceable protective rights inside a cap table that includes Canadian and US investors amounts to a national-security-style veto dressed as an industrial-policy condition, and that the delay itself signals the structure is closer to an ongoing control right than a standard governance clause.

Key tension: Whether Berlin's protective-rights design is a proportionate sovereignty safeguard or a foreign-investment screen that outside capital will price into every future German tech deal.

Sources:Handelsblatt

Mentions:Handelsblatt →Lidl →Nokia →Cato Institute →Germany →Berlin →Infineon →Aleph Alpha →Cohere →Schwarz Group →

First Reported In

Update #11 · Dresden delivers, the logic gap stays open

Handelsblatt· 8 Jul 2026

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Causes and effects

Caused by

Cohere-Aleph Alpha settle at 90/10, no filing yet

The 90/10 split and Berlin sovereignty conditions set at the April announcement are the unresolved terms now stalling the merger's close.

Occurred 25 Apr 2026

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This Event

Aleph Alpha merger stalls on Berlin

Berlin's demand for enforceable sovereignty controls is holding up the €20bn deal meant to build a European AI champion.

Different Perspectives

United States (Google/Alphabet)

Alphabet lost its final Android appeal on 2 July with no further court to hear it, a result its Computer and Communications Industry Association allies frame as precedent, not deterrence, since the €4.1bn fine changed nothing about Google's Play Store terms across eight years of litigation.

UK Department for Science, Innovation and Technology

DSIT opened its £96m second Sovereign AI wave on 3 July, switching from April's equity stakes to fixed-price contracts because Britain has no domestic hyperscaler or Bpifrance-style lender to fund capacity another way. It is betting on buying outcomes it controls alone rather than joining an EU-wide framework.

German federal government

Berlin backed both German deliverables this week, Infineon's fab and Aleph Alpha's merger, but is finding one far harder to close than the other. It wants enforceable protective rights inside Cohere's cap table before the merger closes, a legal instrument the Bundeskartellamt has no filing to review yet.

European Commission

The Commission banked a clean CJEU win on the eight-year Android case on 2 July, removing Google's last comparator argument before President von der Leyen rules on the far larger DMA self-preferencing fine due 27 July. Brussels treats Infineon's early Dresden delivery as proof the Chips Act mechanism works, at the node Europe already led.

Bruegel (EU industry sceptics)

Bruegel economist Mario Mariniello argued the EU sovereignty package mimics US and Chinese strategy while EU cloud providers hold roughly 15% of their home market; using nationality as a proxy for security without fixing the underlying capital and energy gaps that drive the dependency creates €86bn of migration cost without the security benefit it is sold as delivering.

France

France published a joint sovereignty definition with Germany at VivaTech and mobilised €13bn under Tibi Phase 3, placing SAP's partnership with Mistral as the working proof that a German enterprise-software giant running a French sovereign model inside public administration is what digital sovereignty looks like in practice.