NEW YORK (The Deal) -- Green Mountain Coffee Roasters (GMCR) is selling nearly 16.7 million shares or a 10% stake in the company to the Coca-Cola (KO) for about $1.25 billion, the two beverage companies announced Wednesday after the market close.
Green Mountain's stock soared 52.81% in after-hours trading after closing at $80.88, while Coca-Cola's stock was up 0.77% after closing at $37.61 per share.
The newly issued shares are priced at $74.98 per share, equal to the trailing 50-trading-day volume weighted average price as of Green Mountain's market close Wednesday.
The investment is expected to close in March 2014. The exclusive deal is part of a 10-year agreement to develop and sell Coca-Cola's portfolio of brands for use in Green Mountain's Keurig-branded home appliance for making cold beverages.
Proceeds from the stock sale will be used for a share buyback, to reduce dilutions, as well as to fund capital expenditures for the cold beverage appliance over the next few years. The company already has an authorization for a $1.1 billion share buyback program.
Green Mountain also announced first quarter results for the period ended Dec. 28, noting sales were up 4% to nearly $1.4 billion and net income was up 28% to about $138 million, while operating income was up 24% to nearly $227 million.
The single-serve cold beverage system, which is still under development, will use single-serve pods to make cold beverages including carbonated drinks, enhanced waters, juice drinks, sports drinks and teas, in a manner similar to Keurig's hot beverage appliance.