June 3 (Reuters) - APM Human Services International ( APMHF )

said on Monday it would be bought by U.S.-based private

equity firm Madison Dearborn Partners (MDP) in a deal valuing

the Australian company's equity at A$1.3 billion ($865.2

million).

The Australian employment services firm has been a takeover

target since February this year as it battles a labour crunch

amid concerns around higher wages and increasing rent, and

higher drawn debt balances.

Under the scheme with MDP, APM shareholders will receive

A$1.45 in cash per share, representing a premium of about 16% to

the stock's last close of A$1.25 on May 30.

Shares in APM, which were halted on May 30, advanced more

than 11% by 0038 GMT, while the benchmark S&P/ASX 200 index

was up about 1%.

MDP, which is APM's top shareholder with a 29% stake, had

offered in April to buy the remaining 71% of the Australian

employment services firm it does not own for A$1.40 apiece,

slightly below the new offer price.

Before that, APM had rejected a A$1.60 per-share bid from

private equity firm CVC, which later won due diligence with a

higher A$2 apiece offer. APM, however, walked away from the

offer.

The APM board unanimously recommended on Monday that

shareholders vote in favour of the scheme with MDP, in the

absence of a superior proposal.

APM has been reeling from low client flows in its employment

services businesses in Australia and the UK through April and

May, with full-year profits now expected around the bottom end

of the forecast range.

The company in April forecast an underlying net profit after

tax and amortisation between A$95 million and A$105 million for

fiscal 2024, lower than the A$178.2 million posted last year.

APM expects activity levels seen in the second half of

fiscal 2024 would continue into 2025, it said.

Implementation of the scheme is expected to occur before the

end of 2024.

($1 = 1.5026 Australian dollars)

(Reporting by Roushni Nair in Bengaluru; Editing by Jacqueline

Wong and Subhranshu Sahu)