International Paper Co. on Tuesday struck a deal to acquire Temple-Inland Inc. for $4.3 billion in cash and assumed debt, using a sweetened bid to resolve a three-month standoff for control of the packaging products manufacturer.

Memphis-based IP put Temple-Inland in play back in June, offering $30.60 per share for the maker of corrugated packaging and building products. Temple-Inland rejected that offer as too low, leading IP in July to go directly to shareholders with a tender offer.

International Paper said at the time of the tender it would prefer to negotiate a friendly acquisition and apparently persuaded Temple-Inland to talk. Terms of the agreed deal call for IP to pay $32 per share for Austin, Texas-based Temple-Inland for total equity value of $3.7 billion, and assume about $600 million in debt. The combination would bring together two of North America's largest manufacturers of corrugated packaging, with IP pledging to trim about $300 million in costs from the combined entity within 24 months of the deal's closing. But the merger is also likely to draw significant scrutiny from antitrust regulators.

IP chairman and CEO John Faraci in a statement said that "the strategic benefits of this combination are clear, and we are pleased to be able to move forward on terms that are financially attractive for both sets of shareholders."

The sector has been consolidating in recent years. IP in 2008 paid $6 billion for the containerboard, packaging and recycling businesses of Weyerhaeuser Co. Earlier this year Rock-Tenn Co. struck a $3.5 billion deal for Smurfit-Stone Container Corp. to become North America's second largest containerboard manufacturer, trailing only International Paper.

IP would hold an estimated 40% of the market if it closes its deal for Temple-Inland.

International Paper is taking financial advice from an Evercore Partners Inc. team led by Roger Altman and Eduardo Mestre and including John Dillon, John Venezia, David Morse, Kobi Sam, Vikas Raj and Tatyana Yakhnina, and a UBS team led by Karl Knapp, Ehren Stenzler, Willem Enthoven and Vijay Kumra. Debevoise & Plimpton LLP partners Jeffrey Rosen, William Regner and Pierre Maugüé and associates Michael A. Diz, Oran M. Ebel, Joshua A. Kass and Sue Meng are providing the company with legal counsel.

Temple-Inland is taking advice from Goldman, Sachs & Co. and a Wachtell, Lipton, Rosen & Katz team led by Daniel A. Neff and Benjamin M. Roth and including Jeremy L. Goldstein, William Savitt. T. Eiko Stange, Ilene Knable Gotts, Shaun J. Mathew and Yuni Yan.

Eduardo Gallardo and Aaron Holmes of Gibson, Dunn & Crutcher LLP represent UBS and Evercore.