Stone Container's refinancing plan crushed investors' hopes that the recovery would generate enough cash to help the paper company pay off its huge debt.

Relatives on the board of Stone Container, for example, own about 6 percent of the company's stock.

Stone Container closed at $74.50, up $2.

An offer, excluding the value of Stone Container, could be worth about $2.5 billion, analysts said.

Stone Container agreed to acquire the company for $32.25 a share.

Stone Container had planned to use the proceeds to repay some of its bank debts.

Stone Container rose 3 5/8, to 67 1/4.

For example, the short position in Stone Container leaped 4.1 million shares, to 9.4 million.

With seven plants nationwide, Stone Container each year makes more than 25 billion grocery bags or sacks.

Again, it took Stone Container less than a year to turn the plants around.