Coca-Cola will purchase a 10 percent minority stake in Green Mountain Coffee Roasters, according to a press release.

The stock is now going nuts — it's up 40% in after hours trading.

The companies have entered into a strategic agreement relating to Green Mountain's at-home cold beverage system, Keurig Cold.

"With The Coca-Cola Company as a global strategic partner in our multi-brand at-home Keurig Cold beverage system, we believe there is significant opportunity to premiumize and accelerate growth in the cold beverage category by empowering consumers with an innovative, convenient way to freshly prepare their favorite cold beverages at the push of a button," Brian Kelley, President and CEO of GMCR said in the statement.

Greenlight Capital, the hedge fund founded by David Einhorn, is short Green Mountain, and has said that the company's “books are cooked”.

Meanwhile, shares of Sodastream have tanked on this news.

Here's the full release:

The Coca-Cola Company (KO) and Green Mountain Coffee Roasters, Inc. (GMCR) (GMCR) announced today that the companies have signed a 10-year agreement to collaborate on the development and introduction of The Coca-Cola Company’s global brand portfolio for use in GMCR’s forthcoming Keurig Cold™ at-home beverage system. Under the global strategic agreement, GMCR and The Coca-Cola Company will cooperate to bring the Keurig Cold™ beverage system to consumers around the world. In an effort to align long-term interests, the companies also entered into a Common Stock Purchase Agreement whereby The Coca-Cola Company will purchase a 10% minority equity position in GMCR.

Under the terms of the equity agreement, The Coca-Cola Company will acquire 16,684,139 newly issued shares in GMCR for approximately $1.25 billion, which represents an approximate 10% ownership in GMCR (after giving effect to the issuance). The newly issued shares have been priced at $74.98, which represents the trailing 50-trading-day volume weighted average price (“VWAP”) as of market close today.

As part of the strategic collaboration, GMCR will be The Coca-Cola Company’s exclusive partner for the production and sale of The Coca-Cola Company-branded single-serve, pod-based cold beverages. The two companies also will explore other future opportunities to collaborate on the Keurig® platform.

“With The Coca-Cola Company as a global strategic partner in our multi-brand at-home Keurig Cold beverage system, we believe there is significant opportunity to premiumize and accelerate growth in the cold beverage category by empowering consumers with an innovative, convenient way to freshly prepare their favorite cold beverages at the push of a button,” said Brian P. Kelley, President and CEO of GMCR. “This global relationship combines The Coca-Cola Company’s unparalleled brand, distribution and marketing strengths with GMCR’s innovative technology and beverage system expertise.”

“Our 2020 Vision calls for decisive and timely action to continuously improve and evolve our global system to best serve our customers and consumers around the world,” said Muhtar Kent, Chairman and Chief Executive Officer, The Coca-Cola Company. “This agreement demonstrates our creative approach to partnerships and ability to identify and stay at the forefront of consumer trends driving the industry. By pairing The Coca-Cola Company’s brand leadership and global footprint with GMCR’s innovative technology, together we will be able to capitalize on the many exciting growth opportunities in the single-serve, pod-based segment of the cold beverage industry. Importantly, this partnership provides our consumers with a convenient way to enjoy the brands they love through in-home preparation.”

The investment is expected to close in March 2014, subject to customary closing conditions, including receipt of required regulatory approvals.

GMCR’s Keurig Cold™ single-serve beverage system is currently under development with expected availability in GMCR’s fiscal year 2015. Keurig Cold™ will use precisely formulated single-serve pods to dispense freshly-made cold beverages including carbonated drinks, enhanced waters, juice drinks, sports drinks and teas in consumers’ homes with the one-touch simplicity, quality and variety that North American consumers love about the Keurig® brand hot system platform. The cold system is expected to be a similarly open-architecture platform like the Keurig® hot system.

GMCR’s Use of Proceeds

GMCR intends to execute a meaningful share repurchase program to reduce dilution from the transaction. This will be executed under the Company’s existing $1.1 billion share repurchase authorization. In addition, GMCR intends to use a portion of the proceeds from the new equity issuance to fund anticipated capital expenditures for its Keurig Cold™ beverage system over the next several years.

BofA Merrill Lynch served as financial advisor to GMCR and Baker & McKenzie LLP is acting as legal advisor.