One of VMware Inc.’s largest investors has written an open letter to the company’s independent directors that’s highly critical of its proposed “reverse merger” with parent company Dell Technologies Inc.

Jericho Capital Asset Management L.P. managing member Josh Resnick said in the letter Monday that the rumored merger is part of a strategy that would “effectively amount to a bailout of Dell,” which has been saddled with a massive debt ever since buying out shareholders in 2013 to take itself private. That debt increased significantly following Dell’s 2016 acquisition of EMC Corp.

Resnick said that a reverse merger would be “highly detrimental” to VMware’s shareholders.

“There is no doubt in our mind that a reverse merger of Dell into VMware would be a terrible deal for shareholders,” Resnick’s letter stated. “Even the most casual observer can see that VMware gains nothing by saddling the Company’s faster growth, net cash, highly strategic software business with the dead weight of Dell’s slower growth, heavily debt-laden, legacy hardware-dependent entity.”

Rumors that Dell and its founder and Chief Executive Michael Dell (pictured) was considering a reverse merger first appeared in January, when unnamed sources told Bloomberg it was one of several options on the table as the company considers “strategic options” to eliminate some of its debt. Other options being considered include an initial public offering, the sources said at the time.

Dell later acknowledged in a filing with the Securities and Exchange Commission that it was exploring both options, but said it’s also possible that neither would pan out. The rumors later caused VMware’s share price to fall by more than 6 percent when it failed to address them during its fiscal fourth-quarter results.

Resnick said that a reverse merger would solely benefit VMware’s majority shareholder — Dell — and no one else, and cites opposition to the idea from eight other investments firms to show he’s not alone in the thinking. Instead of gobbling up its parent company, he suggests VMware should be focusing on smaller acquisitions, identifying Red Hat Inc., Palo Alto Networks Inc., Splunk Inc. and Rubrik Inc. as better targets.

Resnick concluded his letter by requesting a meeting with VMware’s directors to discuss the matter. It’s not immediately clear if they’re willing to do so.

Market analysts aren’t so sure the deal would be that negative. “I see no immediate effect for VMware, potentially the opposite,” said Holger Mueller, vice president and principal analyst at Constellation Research Inc. “As VMware and Dell explore software/hardware synergies, other hardware manufacturers — the few left — would make efforts to be closer to other hypervisor providers.”

Image: SiliconANGLE