91.5 percent of the British recording company's shareholders accepted the buyout yesterday, The Guardian of London reports, marking the first time a major music group has been acquired by a private equity firm.
As dictated by U.K. law, Terra Firma needed at least 90 percent of shareholder support to secure financing from Citigroup.
Though EMI's music publishing side has seen profits three times those of its recording division, sales in the latter have been declining in the last 20 months, mainly from online downloading and unsuccessful releases (such as Mariah Carey's notorious £70 million recording deal in 2001; Carey's first album, Glitter, failed spectacularly and the singer eventually left with a £28 million pay-off).
Merger discussions with Warner Music date back to 2000, and EMI has since undergone additional deliberations with Bertelsmann's BMG and private equity firms Blackstone and Permira.
In early January, EMI began significant restructuring that resulted in a number of layoffs, including the termination of top exexutives Alain Levy and David Munns.
By mid-February, it had issued two profit warnings and turned down in March a £2.1 billion buyout offer by Warner; in April, it predicted revenues would fall 15%, Reuters reported.
In May, EMI said it had lost £260 million the previous year and agreed to be purchased by Terra Firma for £3.2 billion, including debt. The firm has since made the offer five times as investors resisted and awaited a more lucrative proposal.
EMI's board flatout rejected in June a higher second offer from Warner of 315 pence per share (Terra Firma's was 265 per share) for reasons unknown.
The firm extended its offer for the fifth time on July 29.
"Terra Firma's offer delivers cash now, without regulatory uncertainty and with the minimum of operational risk to the company," BBC News reported EMI chairman John Gildersleeve saying.
But Warner may still acquire EMI's recording division, leaving Terra Firma with the publishing branch, analyst Lauren Martin of Soleil Securities in California told Bloomberg last month.
"This strategy is better for Warner Music because it allows Warner to buy just recorded music."
Analyst Patrick Yau of Bridgewell Securities also told BBC News that he expects Terra Firma will invest more in digital distribution, and that CEO Guy Hands will "weed out underperformers" in EMI's roster of musicians.
"EMI has not been able to attract enough big-selling artists. Being able to offer decent advances is one way of achieving this," said Yau.
EMI's artists include the Beastie Boys, Leif Ove Adsnes, Ian Bostridge, Kevin Federline, Goldfrapp, Ricardo Muti, Itzhak Perlman, Radiohead and Robbie Williams.