Artificial intelligence companies Cohere of Canada and Aleph Alpha of Germany are in talks to merge and have Berlin's support for a potential deal, newspaper Handelsblatt reported late on Thursday.
Citing government and industry sources, the paper said the German government would be willing to become a key customer of a combined company, part of a push to provide digital public services.
"If leading AI companies from Canada and Germany were to join forces that would send a very strong signal," German Digital Minister Karsten Wildberger told the paper.
Germany and Canada were already collaborating closely in the field, he was also quoted as saying.
Aleph Alpha told Reuters that regular discussions over strategic partnerships were standard practice in the AI industry and that Aleph Alpha had its own independent strategy, declining to comment further.
Cohere said it meets "with companies and institutions across Germany and Europe and continually evaluates strategic opportunities that support our global growth."
It also pointed Reuters to its international expansion efforts as well as to the Canadian-German Sovereign Technology Alliance agreed this year, but would not comment further.
Germany's research and digital ministries did not immediately respond to requests for comment.
Handelsblatt said merger talks started early this year and had reached an advanced stage, with plans for the new entity to be headquartered in both countries.
Germany has been eager to catch up with dominant AI players the US and China in a global race to master a transformational technology and attract high-income jobs. India has also emerged as a contender.
Last month, Berlin unveiled plans to encourage investments to boost AI data processing capacity at least fourfold by 2030.
Microsoft, which is collaborating with Cohere, unveiled $23 billion in AI investments in December, with the bulk earmarked for India and parts for Canada.
That was after Alphabet's Google said it would spend $15 billion over five years on an AI data center in India.
