Kasich is the most liberal candidate left in the GOP field.
If Cruz is more conservative than Trump which Cruz claims, but I don’t believe, then Kasich supporters would flock to Trump not Cruz.
And if Cruz is between Trump and Kasich and it becomes known, then Kasich supporters might go to Cruz, but Cruz’s base will abandon Cruz for Trump.
Either way, Cruz loses and Trump wins.
Kasich has built much of his campaign on the concept that he is the more mature, more experienced, adult-in-the-room. He has intentionally positioned himself as the "anti-Trump".
Therefore, if he drops from the race, more of his supporters would remain anti-Trump and move to Cruz, with the possible exception of the establishment types who hate both Trump and Cruz and would support neither.