Nelly Furtado is one of Dreamworks' artists

The Dreamworks label includes artists such as pop singer Nelly Furtado and the band Papa Roach.

The music business is currently going through major changes as it struggles to counter falling sales and the impact of unofficial online music sales.

Last week, Sony Music - the second-largest music company - said it was planning to merge with Bertelsmann.

EMI and Warner Music have also been in talks about a possible merger.

'Exciting' acquisition

Neither Universal nor Dreamworks disclosed the value of the deal, although the Reuters news agency reported a person close to the talks as saying it was worth about $100m (�60m).

ARTISTS ON DREAMWORKS Nelly Furtado Papa Roach Alien Ant Farm Rufus Wainwright Jimmy Eat World The Isley Brothers Q-Tip

Dreamworks Records is the music unit of the Dreamworks entertainment company which was formed in 1994 by film and music leaders Steven Spielberg, Jeffrey Katzenberg and David Geffen.

"We are truly excited about the acquisition of Dreamworks Records," said Doug Morris, chairman and chief executive of Universal Music Group.

"(The Dreamworks team) have built an incredible roster comprised of gold, platinum and multiplatinum-selling artists as well as a host of new acts who will be successful in the future."