Barbie drives into toy town with Matchbox

Barbie is to get a new set of wheels, following a buy-out deal announced yesterday between Mattel, the maker of the ubiquitous fashion doll, and its much smaller counterpart in the toy industry, Tyco, whose products include Matchbox, the brand of miniature cars that has been a toy-chest favourite for decades.

Mattel, which earlier this year failed to acquire its arch-rival in the US, Hasbro, confirmed that it was snatching Tyco in a stock transaction valued at $755m (pounds 453m). Already approved by the boards of both companies, the deal gives shareholders an impressive 78 per cent premium on stock held in New Jersey-based Tyco.

"The outstanding world-wide potential for Tyco's well-known brands will be fully realised through this merger with Mattel," said John Amerman, chairman of Mattel.

Mattel, based in El Segundo, California, was thwarted earlier this year after making an unsolicited $5.2bn bid for Hasbro. Hasbro fought the approach furiously, eventually forcing Mattel to withdraw from the fight last February. Analysts had long expected it, however, to divert its attention elsewhere in its efforts to consolidate its position in the industry.

Among Mattel's best-known products, aside from Barbie, are Cabbage Patch Kids dolls, Fisher-Price pre-school toys, Hot Wheels and several Disney- franchised products.

In early trading in New York yesterday, shares in Tyco had risen $4.5 to $11.5. Shares in Mattel were down slightly at $29.75.