By Daniel Hunter

Coca-Cola has bought a 16.7% stake in the energy drinks company, Monster Beverage, as it looks to expand its business.

Coca-Cola will pay $2.15 billion (£1.3bn) for the shares in a cash-only deal. It will also see Coca-Cola's worldwide energy business transferred to Monster. And Monster will transfer its non-energy businesses, like Peace Tea and Hansen's Natural Soda, to Coca-Cola.

The energy drinks market, despite being around for some years, is still showing strong growth. And with so few players in the game, compared to the fizzy drinks market, Coca-Cola wants to expands its collection of products into the energy drinks market. It is already the world's largest beverage company with more than 500 products.

For Monster, the deal gives it access to Coca-Cola's vast global distribution networks.

In a statement, Muhtar Kent, chairman at Coca-Cola said: "The Coca-Cola Company continues to identify innovative approaches to partnerships that enable us to stay at the forefront of consumer trends in the beverage industry.

"...investment in Monster is a capital efficient way to bolster our participation in the fast-growing and attractive global energy drinks category."

Monster chairman Rodney C. Sacks said: "[The deal gives Monster] enhanced access to the Coca-Cola Company's distribution system, the most powerful and extensive system in the world. At the same time, we become The Coca-Cola Company's exclusive energy play."

Monster's shares surged by 22% in early trading as investors reacted positively to the news. Coca-Cola's shares were up slightly, by 1.2%.

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