UPDATE 2-Madonna drops Warner Music for tour promoter

(Adds details from Live Nation conference call)

By Yinka Adegoke

NEW YORK, Oct 16 (Reuters) - Pop star Madonna has dropped her long-term music label Warner Brothers and signed a multi-album, touring and merchandising global partnership with Live Nation Inc. (LYV.N: Quote, Profile, Research, Stock Buzz), the concert touring company said on Tuesday.

Los Angeles-based Live Nation said the deal will see Madonna become a shareholder in the company though financial terms were not released in the statement.

The deal, which has been expected for more than a week, is estimated to be worth $120 million over 10 years including a three-album commitment, a source familiar with the talks told Reuters last week.

On a call with investors on Tuesday, Live Nation executives, criticized by some Wall Street analysts for spending too much to sign the 49-year-old star, said they had been told they were not the highest bidder.

Chief Executive Michael Rapino said the partnership with an artist of Madonna's caliber validated his company's strategy to develop longer and deeper relationships with touring artists through its new unit Artist Nation.

"We believe it should help attract additional artists to the new Artist Nation model," Rapino said.

A spokesman would not say which other stars Live Nation might sign but indicated there would be further announcements.