Beverage giant, Coca-Cola Co has acquired a 10 per cent stake in Green Mountain Coffee Roasters Inc for USD 1.25 billion.

Green Mountain Coffee Roasters is the maker of popular Keurig one-cup coffee brewer and the acquisition will allow Coca-Cola to expand its presence in the segment. The investment by Coca-Cola will allow the company to launch its new cold drink machine that is expected to be released in October.

The two companies have entered into a ten year agreement under which companies will collaborate on the development and introduction of Coca-Cola products on Green Mountain's upcoming machine. The machine will offer both carbonated and non-carbonated beverages, including soft drinks, tea and juice.

Green Mountain's Keurig machine popularised pods, which are small packets containing coffee, tea or hot chocolate powder for one-cup brewing of hot drinks. The company has sold more than 30 million Keurig machines worldwide and are used at homes, offices and other locations. Following the agreement, Green Mountain's Keurig machine will become the exclusive partner for the production and sale of Coke's branded single-serve, pod-based cold beverages.

Shares of Green Mountain increased 42 per cent to about USD 114.85 during the extended trading hours.