What may be the reason behind the acquisition of Himalayan Water Co.…

Hind Beverages

Hind Beverages Inc., the leading soft drink and drinking water company in the private sector, has acquired Himalayan Water Co., in a deal worth $8.6 billion in 2007 to further expand its market share. A financial decision of this magnitude has significant implicitness for both Hind Beverages Inc and Himalayan Water as well as their employees and shareholders.

Hind Beverages Inc. raised a debt of over $8 billion to finance the transaction. This financing decision affected the capital structure of the acquirer.

What may be the reason behind the acquisition of Himalayan Water Co. by Hind Beverages Inc.?

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Expansion of business

Option (1) Control over shareholders of Himalayan Water Co. — Incorrect. An acquisition gives control over the company, not over its shareholders. The passage does not give this as the aim.
Option (2) Revenge on a rival company — Incorrect. A business decision of this size is taken for business reasons. Nothing in the passage suggests anything else.
Option (3) Expansion of business — Correct. The passage says the company was acquired “to further expand its market share”. Buying another company is a quick way to grow, since its plants, brands and customers come with it.
Option (4) Maximising profit only — Incorrect. The word “only” makes this wrong. The passage names expansion of market share as the purpose.

Note 1: The passage is the NCERT case study ‘When Tata Steel Acquired Corus’, which has been reproduced by NTA in the exam with the names of the companies changed.

Note 2: It seems that there is a mistake in the original NTA paper, which prints “significant implicitness” in the passage when it should read “significant implications”. The slip is NCERT’s own: the NCERT case study prints the same word, and NTA copies lines from NCERT word for word, even where the book is wrong. Read the word as “implications”, meaning effects.

NCERT (2026-27 Edition): “When Tata Steel Acquired Corus Tata Steel, the biggest steel producer in the Indian private sector acquired Corus, a Dutch Steel Company in a deal worth 12 billion USD in 2007. A financial decision of this magnitude has significant implicitness for both Tata Steel and Corus as well as their employees and shareholders. …”