NEW YORK ( TheStreet) -- Temple-Inland ( TIN) shares were popping 25.5% on Tuesday as the company announced it entered into a definitive agreement to be acquired by International Paper ( IP) for $32 a share, or about $3.7 billion.

The Memphis, Tenn.-based International Paper raised its bid for Temple-Inland by 5%, which was enough to persuade Temple-Inland's board to agree to a sale. The original June bid was for $30.60 a share.

Shares of Austin,Texas-based Temple-Inland, a maker of corrugated packaging, were at $30.92, up $6.29 early Tuesday. International Paper shares were at $26.20, up 71 cents, or 2.8%.

"Acquiring Temple-Inland enhances our ability to generate additional cash flow while maintaining our strong balance sheet," International Paper CEO John Faraci said in a statement.

International Paper said it expects the deal to close in the first quarter of 2012 if Temple-Inland shareholders approve the deal.

-- Written by Joe Deaux in New York.

>To submit a news tip, send an email to: tips@thestreet.com

If you liked this article you might like

International Paper Could Be Nearing a Breakout

International Paper, Inogen, Teva Pharmaceuticals: 'Mad Money' Lightning Round

Fantasy Football and Picking Stocks: Cramer's 'Mad Money' Recap (Tues 8/15/17)

International Paper Stock Upgraded on Potential Gains Due to E-Commerce

WestRock, International Paper, No Scissors