Reuters reports, packaging and paper company RockTenn Co has agreed to buy bigger rival Smurfit-Stone Container Corp for $3.5 billion in cash and stock. The deal will triple RockTenn''s annual revenue to more than $9 billion and make the combined company the second-largest containerboard producer in North America after International Paper Co. Under the merger approved by the boards of the two companies, RockTenn will pay $35 in cash and stock per each Smurfit-Stone common share, representing a 27 percent premium to Smurfit-Stone''s closing price of $27.52 on Friday. Demand for paper and packaging has risen in recent months as consumers increase spending on everyday goods that are shipped and sold using packaging, after a near decade-long slump caused by weak demand and overcapacity. RockTenn will also take on Smurfit-Stone''s net debt and pension liabilities, which amounted to $1.8 billion at the end of 2010. Following the transaction, RockTenn shareholders will own approximately 56 percent and Smurfit-Stone shareholders will own 44 percent of the combined company.