Imagine you are a Master of Finance student working for a reputable company that is looking to expand its portfolio through a strategic takeover arrangement. Your task is to identify an undervalued firm as a potential target for this arrangement. Consider the following scenario and answer the question that follows:

Scenario

The global energy sector has witnessed a significant shift towards renewable energy sources, leading to a decline in the valuation of traditional fossil fuel companies. As part of your company's long-term growth strategy, they want to venture into the renewable energy market and acquire an undervalued firm with strong potential for growth and profitability.

Question

Based on your analysis of the renewable energy market and the criteria set by your company, identify and justify a specific undervalued firm that you would recommend as a potential target for the takeover arrangement. Explain the key factors that contribute to its undervaluation and how the acquisition could enhance your company's position in the renewable energy sector.