The new beverage giant, named Keurig Dr Pepper, will gather well-known brands such as Dr Pepper, Orangina, and Schweppes with Green Mountain Coffee Roasters.
Keurig Dr Pepper will have a combined annual revenue US$11bn after what will be one of the largest beverage deals in years.
“Our view of the industry through the lens of consumer needs, versus traditional manufacturer-defined segments, unlocks the opportunity to combine hot and cold beverages and create a platform to increase exposure to high-growth formats,” said Bob Gamgort, Keurig’s CEO.
“The combination of Dr Pepper Snapple and Keurig will create a new scale beverage company which addresses today’s consumer needs.”
Through the agreement, Dr Pepper Snapple shareholders will retain 13% of the combined company and will also receive $103.75 per share in a special cash dividend.
The firms said that the merger would enable Keurig Dr Pepper to have "unrivalled distribution capability to reach virtually every point-of-sale in North America".
US-based Keurig Green Mountain is owned by private equity firm JAB Holding and is best known for its single-serve brewing machines and coffee pods.