TOY MERGER EXPECTED TO ELIMINATE ABOUT 2,700 JOBS.

Byline: Associated Press 

With Barbie making room for Tickle Me Elmo in her Dream House, about 2,700 jobs will be lost in the merger of Mattel Inc. and Tyco Toys Inc.

Mattel, of El Segundo, the world's largest toy maker, announced Thursday that the Federal Trade Commission approved its $755 million acquisition of Tyco, manufacturer of the giggling Elmo that was the craze last Christmas.

About 10 percent of the combined work force of 28,000 will be eliminated in the merger and Mattel plans to take a first-quarter charge of $275 million for restructuring associated with the acquisition.

The FTC action was the final hurdle for completing the deal, which is expected to close by March 31. The takeover puts No. 1 Mattel even further ahead of No. 2 toy maker Hasbro, which spurned Mattel's $5.2 billion takeover offer last year.

``The integration of Tyco's well-known brands such as Matchbox and Sesame Street with the Mattel brands of Barbie, Fisher-Price, Disney and Hot Wheels will strengthen our portfolio,'' said Jill Barad, Mattel's president and chief executive officer.

``And the combination of the two companies will provide efficiencies resulting in significant cost savings,'' she said, citing $700 million in savings expected over the next five years.

Under the deal, Tyco common shareholders will receive Mattel stock equivalent to $12.50 for each Tyco share. Tyco shares were down 12-1/2 cents at $11.50 per share Thursday afternoon on the New York Stock Exchange; Mattel stock fell 75 cents to $23.50 per share.

Tyco, which hit it big last Christmas with its Tickle Me Elmo doll, is the country's No. 3 toy manufacturer. The company, based in Mount Laurel, N.J., has had some financial trouble in the recent past, but after a major restructuring plan implemented in 1995, it has managed to narrow its losses.