TELECOMMUNICATIONS

MCI STICKS WITH VERIZON; QWEST REFUSES TO RAISE BID

MCI, the no. 2 American long-distance phone company, said it will stick with a lower takeover offer from Verizon Communications after Qwest Communications International refused to raise its $8.94 billion bid.

Qwest’s chief executive officer, Richard Notebaert, on Tuesday night balked at a request from MCI directors to increase his offer to $30 a share from $27.50, people familiar with the matter said. Qwest’s offer “as a whole is not superior” to Verizon’s bid of $7.51 billion, or $23.10 a share, MCI said in a statement yesterday.

MCI still needs to persuade investors such as Legg Mason’s Bill Miller, who said they’re skeptical of MCI’s argument that Verizon is the better partner. Holders of more than 27% of MCI stock, including Mr. Miller and MCI’s no. 1 investor Carlos Slim, have said Verizon’s bid is too low, prompting Qwest to consider bypassing MCI’s board and making its offer hostile.

“We’re not going to vote for the Verizon offer,” Mr. Miller of Legg Mason, which owns 5.6 million MCI shares, said yesterday in an interview. “There must be a manual lying around MCI on how to destroy shareholder value.” Mr. Miller yesterday said in a letter to MCI’s chairman, Nicholas Katzenbach, he believes “current shareholders of MCI overwhelmingly prefer the Qwest offer.”

MCI shares rose to $25.39, signaling investors expect MCI to be sold for more than Verizon offered as Qwest presses its case. The stock added 38 cents at 4 p.m. New York time in Nasdaq Stock Market composite trading.

– Bloomberg News

AUTOMOTIVE

GM TO INVEST $100M TO BUILD HUMMER IN SOUTH AFRICA

General Motors Corporation, which sells about half its autos outside America, will invest $100 million to produce a Hummer sport utility vehicle in South Africa, the first time the brand will be built outside GM’s home market.

A factory in the coastal city of Port Elizabeth will begin delivering the Hummer H3 for export to Europe, the Middle East, and Africa during the fourth quarter of 2006, officials of Detroit-based GM said on a conference call.

Production of the H3, the latest in a series of military-style vehicles, will begin at a GM factory in Shreveport La this year.

GM, the world’s largest automaker, is trying to increase international sales after its global market share slipped a 10th of a point to 14.5% last year. Rising sales in the rest of the world couldn’t overcome a 1.3% drop in America as Asian automakers such as Toyota Motor Corporation gained ground.

– Bloomberg News

MARKETS

GOLDMAN’S PAULSON DEFENDS REPORT DISCUSSING $105 OIL

Goldman Sachs Group’s chief executive, Henry Paulson, said his analysts are “totally independent” from traders, responding to criticism about a Goldman oil report that helped boost prices by suggesting crude may almost double to as much as $105 a barrel.

Investor Jon M. Burnham at Burnham Securities in New York called the March 30 report by Goldman equity analyst Arjun N. Murti “self-serving,” because Goldman is one of Wall Street’s two largest commodity traders with Morgan Stanley. The title was “Super Spike Period May Be Upon Us.”

“Our traders were as surprised as everyone else was” by Mr. Murti’s analysis, Paulson said at the firm’s annual shareholder meeting in New York today. “Our research department is totally independent. Our trading departments have no say about this.”

Crude oil rose 2.6% in New York on March 31 after the Goldman Sachs note. Three sessions later, oil touched $58.28 a barrel, the highest in the 22 years that the futures have traded on the New York Mercantile Exchange.

Merrill Lynch analyst David Bowers on Tuesday called Murti’s theory “premature,” saying slower consumer spending may damp oil prices.

– Bloomberg News