Johnson & Johnson raised its offer to purchase medical device maker Guidant yesterday to $23.2 billion dollars, though still shy of the $25 billion bid by rival Boston Scientific.

Guidant put its backing behind the new offer, saying it had recommended the $68.06-a-share bid to its shareholders and asked them to vote in favour of it at the firm’s shareholder meeting on January 31.

Guidant chief executive James Cornelius said that the J&J deal “provides significant financial value and certainty for shareholders. We will have the resources to continue to build upon the existing Guidant businesses in our pursuit of meaningful innovations to address cardiovascular disease.''

Boston Scientific quickly rushed out a statement saying: "It is clear that our $72 per share offer is superior to the $68.06 per share now being offered by J&J. Our discussions with Guidant are ongoing. We intend to vigorously pursue this transaction to its completion."

The combative stance adopted by both companies raises speculation that Boston Scientific could come back with a higher offer and spark a bidding war for Guidant.

Johnson & Johnson originally offered $25.4 billion for Guidant, but lowered the amount to $21.5 billion 11 months later because of a major product recall at Guidant, as well as regulatory investigations that it said had affected the business’s value. Boston Scientific made its $25 billion bid in December, and tabled a formal offer January 8.

In its proposal, Boston Scientific said it would sell Guidant's stent business to Abbott Laboratories for more than $4 billion.

Both companies want Guidant to grab a slice of the fast-growing $10 billion market for pacemakers and implantable cardiovascular defibrillators (ICDs). Guidant is placed second in this market, behind Medtronic and ahead of St Jude Medical, but is gearing up to launch a new range of cardiac rhythm management (CRM) systems, including wireless versions, that are tipped to be big sellers.