Apple confirmed rumours on Wednesday night with an agreement to acquire subscription streaming music service Beats Music, and Beats Electronics, which makes the popular Beats headphones, founded by rapper Dr Dre.

Beats co-founders Jimmy Iovine and Dr. Dre will take away $3bn, consisting of a purchase price of approximately $2.6bn and $400 million that will vest over time. Both founders will also join Apple as employees.

Formally established in 2008 as the brainchild of artist and producer Dr. Dre and chairman of Interscope Geffen A&M Records, Jimmy Iovine, Beats made headway with a family of premium consumer headphones and most recently launched a streaming music subscription service Beats Music.

The company has had less successful tie ups before. A partnership with handset firm HTC reached a crashing finale in September 2013, when the headphone maker bought back the remaining 25 per cent of its shares owned by the Taiwanese firm for $265m. The partnership was a poor deal for HTC, which bought 50.1 per cent of Beats in 2011 for $300m and sold half of that back in 2012 for $150m.

“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” said Tim Cook, Apple’s CEO. “That’s why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world.”