Under the revised agreement, Johnson & Johnson will buy Indianapolis-based Guidant for about $63.08 per share, down from the original offer of $25.4 billion, or about $76 a share, in December.
The deal, which was originally expected to close in the third quarter, was delayed with Guidant's continued problems over the summer with the recall of thousands of pacemaker and implantable defibrillators, causing many to fear that the transaction would not close. When Johnson & Johnson showed signs of wanting to back away from the original deal, Guidant sued J&J to complete the deal.
J&J said it did not feel bound by the original terms, however, because of Guidant's problems.
Guidant shareholders, who must approve the revised deal, would get $33.25 in cash and 0.493 shares of Johnson & Johnson common stock for each share.
The companies expect the transaction to close in the first quarter of 2006.
Since June, Guidant has recalled or issued warnings about 88,000 heart, including its top seller, the Contak Renewal 3, and almost 200,000 pacemakers because of reported malfunctions.
Earlier this month, the Federal Trade Commission conditionally approved the acquisition.
The following day, New York Attorney General Eliot Spitzer sued Guidant for fraud, accusing it of not telling doctors about a potentially fatal flaw in some of its defibrillators.