RockTenn Co, the packaging and paper company, has concurred to buy larger rival Smurfit-Stone Container Corp for the amount of $3.5 billion in cash, including stock for seven months.

The deal was announced on Sunday. This occurred after Smurfit rose from bankruptcy with less debt and higher potentials in profit.

This will increase RockTenn’s annual revenue three times up to more than $9 billion. The combined company will be considered as the second-largest containerboard producer in North Africa following International Paper Co.

Based on the agreement approved by the boards of both companies, RockTenn will pay $35 in cash, as well as stock per each Smurfit-Stone common share. This represents 27 percent premium to Smurfit-Stone’s $27.52 closing price on Friday.

Along with the deal, RockTenn Chairman and Chief Executive, James Rubright is making a big bet that the demand for containerboard will increase as the economy of United States comes out of the recession.

In the recent months, the demand for paper and packaging has increased as consumers elevated their everyday spending on goods that are sold and shipped through packaging. The improvement occurred after an almost decade-long fall because of the weak demand and overcapacity.

Guided by the terms of the deal, RockTen will offer 50 percent cash and 50 percent stock for Smurfit. That is, $17.50 in cash and 0.30605 RockTenn share for every Smurfit share.

RockTenn shareholders will possess an estimated 56 percent while Smurfit-Stone shareholders will possess 44 percent of the joint company following the deal.

The agreement is anticipated to close in the second quarter upon the regulatory and shareholder approval.

Banks repossessed a record of 2.87 million homes in US throughout the year 2010 as the two year-old mortgage crisis continued to be a burden in the economy, according to foreclosure specialist RealtyTrac.

Foreclosures reached 2.23 percent of all housing in the country, which is equivalent to one out of 45 homes. This increased from 2.21 percent in 2009, the RealtyTrac stated in its report for 2010.

However, the rate of foreclosures smoothened in the fourth quarter when banks received rising legal challenges form the owners who got mad because banks took their homes under a haphazard process.

The report showed that December’s 257,747 foreclosure filing were 26 percent lower than the number of foreclosures during the earlier period of the year, and were two percent low from month to month.

RealtyTrac chief executive James Saccacio said in a statement that the total properties receiving foreclosure filings would have simply surpassed three million in 2010 if it was not for a fourth quarter drop in foreclosure activity.

However, Saccacio predicted that the estimated 250,000 foreclosures halted during the fourth quarter would be reopened in early 2011.

Foreclosure rates have increased in three states namely, Arizona, Florida, and Nevada. These were the three Sunbelts states that had wide real estate overbuilding and speculative investment during the property boom in 2002-2007.

In Arizona, foreclosures reached 5.7 percent of all homes while Florida reached 5.5 percent. In Nevada, one in 11 homes or 9 percent of  all homes was hit with a foreclosure filing last year.

Arizona and Nevada filed lawsuits against Bank of America denouncing it of deceiving cash-strapped homeowners in the middle of the global economic downturn.

International bankers warn that forcing several financial establishments to reach up with the new capital requirements too fast could

greatly hurt the economies around the world.

As a result of the Basel III agreement that 27 countries have settled last month, individual countries might push their banks to meet with the new capital and liquidity standards before the deadline on year 2019.

According to the chief executive of Deutsche Bank, Josef Ackerman, there really is a great concern when national governments accelerate the phasing in process on the finance industry.

Ackerman, the chairman of the Institute of International Finance, which is holding its yearly meeting in Washington this weekend, warns along with other bankers that global economy is still fragile. Forcing the capital standards too quickly could already throttle the economy even before it has recovered.

The Basal III agreement states that banks should get top-quality capital equivalent to a total of 7-percent of their risk-bearing assets. That is three times more than the current standards so they can better endure financial shocks and downturns on the economy.

They have until 2015 to meet the minimum core Tier capital requirement; that is, at least 4.5 percent of assets. By 2019, they should have additional 2.5 percent, which is called the capital conservation buffer.

Even the regulators who attended the event treated the idea that the timetable would be moved up as less important, thinking that the new requirements will not impact the economies around the world negatively.