LONDON (Reuters) — British music company EMI agreed to a $2.4 billion ($4.73 billion) cash takeover from private equity group Terra Firma yesterday in what could be a final snub to long-term suitor and rival Warner Music.The offer of 265 pence a share sent EMI's stock up to close 9.3 percent higher at 271 pence, indicating investors thought a higher counter-bid was possible.

A source familiar with the deal told Reuters that Terra Firma intended to keep EMI intact and proceed with plans to securitise the company's reliable music publishing assets.

The source said Terra Firma, whose chief executive is buyout mogul Guy Hands, did not have a management team lined up to take over as is often common in such deals.

The difficulties facing EMI were also laid bare yesterday as the group released its final results, showing pretax profit down more than 60 percent.

Terra Firma said that including debt the deal put a value of $3.2 billion on EMI, home to artists including Kylie Minogue and Norah Jones. The agreement also includes a break fee of $24 million if EMI pulls out.

If accepted by shareholders, the deal would bring an end to the seven-year stand-off between the world's third largest music company, EMI, and the number-four, New York-based Warner.

The two groups have tried to combine on numerous occasions but any deal may have struggled for regulatory approval as another merger, Sony/BMG, is still being examined by the European Commission.

Warner declined to comment yesterday.

"The EMI board received a number of proposals from several different parties," chairman John Gildersleeve said.

"Terra Firma's offer is the most attractive proposal received and delivers cash now, without regulatory uncertainty and with the minimum of operational risk to the company."

Numis analyst Paul Richards said it was good to see an official bid price for EMI after months of speculation but said he still expected Warner to try again as he did not see the $24 million break clause as too large in this case. Sources familiar with the situation had previously told Reuters that EMI had opened its books in recent weeks to Warner and three other private equity groups.

Details of Terra Firma's strategic plans will also be a blow to Warner as it had been thought that any private equity buyer might only keep the cash-generative music publishing arm and sell the struggling recorded music division to Warner.

"Terra Firma sees significant opportunity on both sides of the business," said the source, who requested anonymity.

"It believes in the digital growth opportunity in the music market, in general, and so the expectation is that the business will be held together."

Another source familiar with the talks said Warner was considering its options and did not think it would have to return with a counter bid straight away.

Alternatively, it could return to buy EMI at a later date from Terra Firma once the regulatory outlook is clearer.

British-based EMI also released full-year results, showing a 61 percent fall in underlying profit before tax to $62.7 million in the year ending in March, due to worsening market conditions. Underlying group revenue fell by 16 percent on a reported basis and by 12 percent at constant currency.

Revenue from its recorded music unit fell by 15 percent at constant currency, while it said the EMI publishing unit outperformed the recorded music market with revenue declining by only 0.9 percent.