NEW YORK (CNNMoney.com) - Guidant's board of directors determined that the company's newly ramped-up offer from Boston Scientific Corp. is superior to Guidant's current merger agreement with Johnson & Johnson.

Boston Scientific (Research) raised its acquisition offer for Guidant Corp. (Research), a medical devices maker, to $80 a share Tuesday, bolstered by support from Abbott Laboratories in the latest stage of a bidding war with Johnson & Johnson.

Johnson & Johnson (Research) said it received notice that the Guidant board has deemed Boston Scientific's proposal superior.

Johnson & Johnson said it views the $80-per-share offer by Boston Scientific to be highly dilutive, but it will consider its alternatives under the existing merger deal with Guidant.

Earlier in the day, Guidant said it wanted to stick with bidder Johnson & Johnson, but wants the consumer giant to raise its bid to $77 a share, according to Reuters, which attributed the information to sources familiar with the situation.

Boston Scientific called its $27 billion offer "clearly superior" to the latest bid from Johnson & Johnson, which has been revamped three times. Guidant on Jan. 14 accepted the latest offer from Johnson & Johnson, which came to $71 a share, or $24.2 billion. At that time, Boston Scientific had offered $24.8 billion.

Abbott Labs said Tuesday that it has agreed to buy $1.4 billion of Boston Scientific stock, or about 56 million shares, "contingent upon the closing of the Guidant acquisition." As part of the amended agreement, Abbott plans to pay Boston Scientific $4.1 billion to buy Guidant's vascular business if the merger goes through.

"That changes the nature of this bid," said Jan David Wald, analyst for A.G. Edwards & Sons, who compared the battle between corporate bidders to the Cold War face-off between national superpowers.

"Now Boston Scientific has Abbott as an element in the bidding process," said Wald. "It strengthens its position and you could view it almost as the U.S. against the Soviet Union. You deploy more resources against the Soviet Union until the Soviet Union caves."

Before Abbott agreed to help Boston Scientific in the bidding process, Wald estimated that the $78 a share was the maximum offer that Boston Scientific could make without changing its capital structure. But this scenario has changed, and Wald said the Abbott-backed offer of $80 a share seemed "palatable" for Boston Scientific.

Boston Scientific and J&J have been locked in a heated battle to control Guidant, the second-biggest player in the $10 billion market for implantable defibrillators and pacemakers. Medtronic (up $0.46 to $58.80, Research) is the market leader in making these types of medical devices, while St. Jude (up $0.30 to $53.83, Research) is the third-largest maker.

Wald, the analyst for A.G. Edwards & Sons, considers the cardiac rhythm market "one of the fastest growing markets in medical technology."

J&J did not immediately return calls for this story.

Wald owns stock in three of the companies mentioned: J&J, Boston Scientific and Guidant.

--From staff and wire reports

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