(Adds background) Dec 28 (Reuters) - Australia's Nitro Software...

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Dec 28 (Reuters) - Australia's Nitro Software (NTO) on Wednesday rejected an alternative takeover bid from Potentia Capital, after the private equity firm said it would allow Nitro shareholders to choose between an all-cash, scrip or a deal involving the combination of both, at the same offer price.

Nitro, which had recommended a sweetened A$526.9 million ($354.55 million) offer from KKR Inc's KKR.N Alludo, trumping a higher bid by Potentia earlier in December, said it would recommend shareholders to vote for the Alludo scheme.

Alludo's proposal of A$2.15 a share outbids private equity firm and top shareholder Potentia's A$2 per share for the PDF and e-signature software signing company.

Nitro recommended that shareholders reject the Potentia takeover offer and vote in favour of superior Alludo scheme.

The scheme of arrangement requires 75% of investors' support for it to go ahead. ($1 = 1.4861 Australian dollars)