If a company makes a lot of mergers and acquisitions, some investors in Korea often smell a rat.

But M&As are a must for Celrun Co. to transform itself into a major IT firm from a manufacturer of set-top boxes, said Kim Young-min, its chief executive officer.

"There seems to be a tendency among Korean investors to hold a negative view on companies that frequently make deals, as if they are up to some kind of trick," the 40-year-old engineer-turned-CEO.

"If pursuing organic growth is like putting your money in banks, making M&A deals can be compared to investing it in the stock market - it is riskier but is an option for those seeking high returns," he said.

Kim said he has made around 20 M&A deals since the foundation of Celrun in 1999 and about half of them were a success.

The latest and largest of the deals was the acquisition of TriGem Computer Inc., the country's third-largest PC maker, for 122 billion won ($125 million). In October 2007, Celrun purchased a 46.07 percent stake in TriGem which was then under court receivership. The PC maker graduated from two and a half years of court protection early this year.

"TriGem has a very strong brand and a nationwide distribution and after-service network, which Celrun needed badly for its growing business," Kim said.

TriGem will serve as a springboard for Celrun to take the leap into a major IT firm in the era of digital convergence, making it possible to diversify its business portfolio which is focused on the manufacturing of IPTV set-top boxes.

"TriGem has started rebuilding its overseas network, which was dissolved after the company was placed under court receivership," Kim said. It aims to make PC sales of 50 billion won outside Korea and 380 billion won in Korea.

Kim said he would push for a re-listing of TriGem on the main stock market in the first half of next year.

The CEO is also looking to broaden the business horizons of Celrun in the IPTV market, as more Koreans are expected to subscribe to internet protocol TV, or IPTV, which offers real-time television programs and interactive services such as e-commerce over the internet.

Kim has set up a joint venture with Daum Communications Corp., the country's second-largest Web portal and search engine firm to provide the IPTV service.

"'Open IPTV' will be buying set-top boxes from Celrun," he said, referring to the joint venture.

Currently, Celrun earns nearly 70 percent of its profits by supplying set-top boxes to Hanaromedia, the country's No. 1 IPTV service provider, under the brand name of Hana TV.

The firm has a subsidiary in the United States, with the hope of gaining an upper hand in the IPTV market, although it is yet to fully take off.

"We're talking with at least three U.S. firms to supply our set-top boxes for their IPTV service," Kim said.

By Lee Sun-young

(milaya@heraldm.com)