INDIANAPOLIS (AP) -Guidant Corp. and Johnson & Johnson said late Wednesday they had reached an agreement under which J&J would acquire the medical device maker for $23.2 billion.

J&J’s latest offer topped its own former $21.5 billion bid, but fell short of rival Boston Scientific Corp.’s $25 billion offer.

Guidant’s board said it would recommend that shareholders vote in favor of the revised deal during a scheduled Jan. 31 meeting, according to a joint statement from both companies. Both companies’ boards unanimously approved the revised J&J offer, the companies said.

Under the new agreement, J&J will pay $37.25 in cash and 0.493 shares of Johnson & Johnson common stock for each outstanding Guidant share.

The transaction would have a per share value of $68.06 based on Wednesday’s market close.

Guidant Chairman and CEO James Cornelius said the J&J deal would provide certainty for Guidant’s shareholders and employees.

“Together with Johnson & Johnson, we will have the resources to continue to build upon the existing Guidant businesses in our pursuit of meaningful innovations to address cardiovascular disease,” he said.

In December 2004, J&J offered $25.4 billion for Guidant, but lowered the amount to $21.5 billion 11 months later because of Guidant’s product recalls and regulatory investigations.

Since June, Indianapolis-based Guidant has recalled or issued safety warnings about 88,000 heart defibrillators and almost 200,000 pacemakers. The company also faces numerous lawsuits.

Natick, Mass.-based Boston Scientific announced its unsolicited offer to buy Guidant in early December and officially presented the deal to Guidant’s board Sunday. In its proposal, Boston Scientific planned to sell part of Guidant’s business to Abbott Laboratories Inc. for more than $4 billion.

Boston Scientific and Guidant officials did not immediately return calls seeking comment.

William Weldon, J&J’s chairman and CEO, said he had confidence in Guidant’s employees and called them “technology innovators.”

“Together with Guidant, we have spent more than a year planning an integration that will create an extraordinary cardiovascular device business that can deliver better medical treatment sooner to millions of patients,” Weldon said. “We strongly believe that our union with Guidant is the only one that can deliver on that promise, and create lasting value for shareholders of both companies.”

Both New Brunswick, N.J.-based J&J and Boston Scientific have said they see the company as a way to expand their presence in the $10 billion cardiac device market.

Earlier this week, at least one Guidant shareholder called Boston Scientific’s offer superior.

“We strongly urge Guidant’s board to recognize the superiority of Boston Scientific’s offer versus J&J’s and, just as importantly, to ensure a level playing field should J&J increase its offer,” Ivan Krsticevic, senior portfolio manager at Elliott Associates LP, wrote in a letter to Guidant’s board this week. “Anything less than $71 per share from J&J should not be accepted, in our view.”

The New York hedge fund owns 3 million Guidant shares.