Following a recent report of a potential merger between Dell Inc. and EMC, Credit Suisse analyst Philip Winslow released a report outlining Credit Suisse’s take on how things will play out between Dell, EMC and VMware.

Winslow believes that if EMC’s stake in VMware is spun out, the company could soon become a takeover target for larger IT names.

The Scenario

Winslow believes that a VMware spinout prior to a Dell/EMC merger makes sense in a lot of ways. First, the debt burden associated with acquiring VMware along with the rest of EMC would likely be too much for Dell to manage. Second, the sale of EMC’s core business to Dell could result in a higher valuation for EMC, which is one of the main points of Elliott Management’s call to break up EMC.

What Would It Mean For VMware?

For VMware, this scenario would mean…

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