JAB Holding Company's attempts to forge a food and coffee empire has resulted in a new deal enabling Keurig Green Mountain (GMCR  ) to take over the Dr Pepper Snapple Group for $18.7 billion. This bid will bring Keurig and JAB, its majority owner, closer to forming a beverage giant capable of turning $11 billion in revenue. Together, they will be able to offer a diverse array of products, including Keurig's single-serve coffee pods, Dr Pepper, 7Up, and Snapple.

This deal constitutes another move in the push towards consolidation in the food and beverage industry, as more companies seek to build themselves up in size and scale. Among JAB's other recent acquisitions include Peet's Coffee, Caribou Coffee, and Krispy Kreme. JAB also convinced Keurig to go private - a deal that cost roughly $14 billion - and merged it with D.E. Master Blenders, which itself had been acquired as well. Keurig's acquisition took place at a time when K-Cup sales were declining, and Keurig was faltering due to competition from Nestle's (VTX: NESN) Nespresso. Under the leadership of its current CEO, Bob Gamgort, Keurig machine sales have gone up, and the number of K-Cup brewing partners has risen. Prices have also been cut.

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According to Gamgort and Larry Young, CEO of Dr Pepper Snapple, beverage companies well-equipped to responding to shifting consumer tastes will be better able to forge ahead in the new markets. The sodas that Dr Pepper founded its business on are falling out of vogue, and its healthier offerings, like teas by Bai Brands, are becoming increasingly popular. The idea of acquiring Dr Pepper became more appealing to Keurig, as Dr Pepper would allow Keurig to extend its reach into the soft drink niche that it had previously floundered in, with its unsuccessful offering of the Kold soda-at-home machine in 2016. Post-merger, Keurig will become Keurig Dr Pepper, and Dr Pepper Snapple shareholders will each receive cash dividends of $103.75 per share, which contains an excess 8% of what Dr Pepper Snapple's closing share price was last Friday. Likewise, Keurig will re-enter public markets, under JAB's control. Dr Pepper investors will own 13% of the combined company, with Mondelez (MDLZ  ), a Keurig stakeholder, holding 13%.

Keurig expects to generate roughly $600 million in annual cost savings in 3 years, due to lowered advertisement expenses and less costly operations for warehousing and storage. As a result, it seeks to reduce its overall debt within 3 years.

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Dr Pepper Snapple shares jumped by 24% in trading on Monday, causing some whispers of another, more lucrative suitor. Gamgort was quick to defend his company's offering, and the deal is expected to close by June 30, after garnering approval from Dr Pepper Snapple shareholders and regulators. That being said, the logistics of the transaction are still unclear, as many of Dr Pepper's beverages are distributed to Coca-Cola (KO  ) and PepsiCo (PEP  ) networks. These networks have the option of denying the new Keurig Dr Pepper access for unfamiliar beverages, like ready-to-drink coffee. On the other hand, Keurig's relationships with e-commerce companies and tech sellers like Amazon (AMZN  ) and Best Buy (BBY  ) can be added to Dr Pepper's existing relationships with convenience stores, drugstores, and beverage vendors.