For Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR), Wednesday turned out to be a good day. Coca-Cola Co. (NYSE:KO) has bought a 10 percent stake in the company, investing $1.25 billion to launch its new cold drink machine Keurig Cold, according to news reports.

According to the agreement signed between the two companies, they will work together to introduce Coca Cola’s products on Green Mountain’s new machine. The Keurig Cold system will be launched between late 2014 to early 2015 and will be able to produce “carbonated drinks, enhanced waters, juice drinks, sports drinks and teas,” Green Mountain said in a statement. The system will bring both the companies into a direct competition with SodaStream International Ltd. (NASDAQ:SODA), which was rumored to be a target of PepsiCo (NYSE:PEP) last year. No such deal ultimately took place and Pepsico had shot these rumors down.

Green Mountain President and CEO Brian Kelly said, "This global relationship combines The Coca-Cola Company's unparalleled brand, distribution and marketing strengths with GMCR's innovative technology and beverage system expertise."

As per the agreement that has been signed, Coca-cola will take around 16.7 million freshly issued shares, which have been priced at $74.98, according to a Reuters report. It also has the right to increase the current minority stake it has acquired through open market purchases during the first 36 months, a Coca-Cola representative told Reuters.

Muhtar Kent, Coca-Cola’s CEO, said on a call that the deal would bring in new opportunities to explore and would better its bottling system. "This is not a zero-sum game," Kent said, in a call with reporters stating that the Green Mountain machine represents a "real game-changing innovation."

Green Mountain’s shares soared more than 30 percent in after-hours trading to $109.37. Coke shares rose 1.4 percent to $38.12, after the news became public on Wednesday afternoon while SodaStream’s stocks saw a 6 percent slump.

Kelly told Reuters that though Green Mountain has become an exclusive partner for the global beverage major for the production and sale of its single-serve, pod based cold beverages, it can still sign deals with other cold drink makers. “We’ll do deals with brands consumers love,” he added.

Green Mountain had been criticized for its business model and accounting by investors like Greenlight Capital’s (NASDAQ:GLRE) David Einhorn, but the deal seems to have put a pause to such denigrations, according to a New York Times article.

Jonas Feliciano, a beverage industry analyst for market researcher Euromonitor International, told ABC News that in the new Keurig machine, the user won't even need to replace the CO2 carbonation cylinders, which becomes a major problem with Sodatream’s machines. Feliciano said the potential of this deal between Coca-Cola and Green Mountain was "even beyond SodaStream.”