PLANO -- Plano-based Dr Pepper Snapple Group and Keurig Green Mountain plan to merge in a soda-coffee deal that creates a beverage giant with iconic consumer brands and an estimated $11 billion in annual revenues, the companies said Monday.

The deal would bring together famous sodas, juices and teas like Dr Pepper, 7UP, Snapple, A&W, Mott's and Sunkist with Green Mountain Coffee Roasters, Keurig's single-serve coffee systems, and more than 75 owner, licensed and partner brands in the Keurig system, including Original Donut Shop Coffee.

The combined company, to be called Keurig Dr Pepper, would have roughly $11 billion in pro forma combined 2017 annual revenues, the merger partners said.

"We’re optimistic about the outcome of the merger and understand that it is subject to the approval of Dr Pepper Snapple shareholder and regulatory approval," Steve Stoler with the City of Plano said. "We understand that Keurig and Dr Pepper Snapple will continue to operate out of their current locations."

The companies have done business before. In early 2015, Keurig signed a multi-year agreement to sell pods of Dr Pepper soda brands for the Keurig Cold system in the U.S. and Canada.

The terms of the new deal call for Dr Pepper Snapple shareholders to receive a $103.75 per share special cash dividend and retain 13% of the combined company.

JAB Holding, a Europe-based privately held group focused on long-term investments in companies with premium brands, acquired Keurig Green Mountain in 2016 and will become the controlling shareholder of the new entity.

The transaction marks a new major U.S. acquisition for JAB after one of its investment vehicles acquired Panera Bread for more than $7 billion in April 2017. JAB also controls coffee brands Peet's and Caribou.

Mondelēz International, a U.S. confectionery, food, and beverage company, has a coffee partnership with Keurig and will have a significant stake in the newly combined companies.

Shares of Dr Pepper Snapple (DPS) rocketed up nearly 32% to $126.18 shortly after U.S. financial markets opened Monday. Before the announcement, the stock had been up 5.5% from this time last year.

The combined companies will have "unrivaled distribution capability to reach virtually every point-of-sale in North America," they said.

The new company is targeting $600 million in synergies on an annualized basis by 2021, the merger partners said.

Dr Pepper Snapple expects to pay its first-quarter regular dividend of 58 cents per share. The new company expects to deliver an annual dividend of 60 cents per share after the deal closes.

"This transaction will deliver significant and immediate value to our shareholders, along with the opportunity to participate in the long-term upside potential of our combined company and attract new brands and beverage categories to our platform in a fast-changing industry landscape," said Larry Young, president and CEO of Dr. Pepper Snapple.

Bart Becht, partner and chairman of JAB Holding Company as well as Keurig's chairman, said the deal raises the "prospect of KDP becoming a challenger in the beverage industry."

"Management’s proven operational and integration track record along with their commitment to innovation and potential future brand consolidation opportunities, while maintaining an investment grade rating, positions the company well for long-term success and material shareholder value creation," Becht said in a formal statement.

“The merger comes as a surprise, given the challenges that Keurig had a few years ago with their aspiration to break into the broader (ready-to-drink) category with Keurig Kold,” Vivien Azer, an equity analyst at the financial services firm Cowen, wrote in a research note that referred to the company’s at-home cold-drink maker, which it nixed in 2016.