Exclusive: Horizon Pharma explores potential stake sale - sources

By Greg Roumeliotis and Carl O'Donnell

(Reuters) - Specialty pharmaceutical company Horizon Pharma Plc (HZNP.O) has hired Bank of America Corp (BAC.N) to help it explore selling a significant equity stake to an investor that would bolster its balance sheet, people familiar with the matter said on Monday.

It is not clear how Horizon would use the proceeds, but the move illustrates the Dublin, Ireland-based company's drive to shore up its capital and position itself for new acquisitions. Horizon has a market capitalization of $2.4 billion (1.82 billion pounds) and a debt pile of close to $1.3 billion.

Horizon is in the early stages of exploring new financing options, and there is no certainty that any transaction will occur, the people said, asking not to be identified because the deliberations are confidential.

Horizon Pharma and Bank of America declined to comment.

Horizon makes drugs to treat ailments that include arthritis, inflammation and orphan diseases. It had net sales of $757 million in 2015.

Horizon Chief Executive Tim Walbert has been vocal about his desire to expand Horizon through acquisitions at a time when valuations throughout the life sciences sector are down significantly from their 2015 highs.

Walbert has also said the company has the ability to raise a significant amount of additional financing from debt markets, citing Horizon's relatively low ratio of net debt to earnings before interest, taxes, depreciation and amortization.

The valuations of specialty pharmaceutical companies have fallen partly because Canadian peer Valeant Pharmaceuticals International Inc's (VRX.TO) drug pricing practices have attracted scrutiny from regulators and politicians.

Valeant, as well as rival Endo International Plc (ENDP.O), have been contemplating asset sales as they seek to pay back debt accumulated during years of aggressive deal making, Reuters has reported.

Earlier this year, Horizon acquired Crealta Holdings for $510 million, adding its gout treatment to a portfolio of drugs focused on rare diseases, rheumatology and primary care.

Walbert has said he wants to increase Horizon's focus on rare diseases, which would pivot the company away from primary care, where pricing pressure has been more pronounced.

In 2015, Horizon raised $1.75 billion through four debt and equity offerings. As a result, it lowered the annual cash interest rate on its debt from 7.7 percent to 4.7 percent.

Horizon last year launched and then abandoned a hostile bid to acquire peer Depomed Inc (DEPO.O), after a California court ruled that the overture was based on improper use of confidential information.

(Reporting by Greg Roumeliotis and Carl O'Donnell in New York; Editing by Richard Chang)