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Bunuel
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The child psychologist suggests that the formation of social groups of young children, like the adults who raised them, is based on common interests and hobbies.

(A) the adults who raised them
(B) that of the adults who raised them
(C) that among the adults who raised them
(D) they that raised the adults
(E) the formation of social groups of the adults who raised them

MANHATTAN REVIEW OFFICIAL EXPLANATION:



There is an ambiguity that arises without the use of an appropriate pronoun in this sentence. Choice A compares the adults to the formation. In choice D it is not clear to what the ‘they’ refers. D also changes the meaning. Choice C does not maintain parallel structure as it has ‘among’, which is not parallel to the earlier ‘of’ in the sentence. Choice E is not as efficient as choice B. B, by using the word that, refers to the correct comparison: the formation of social groups by two different age groups. Choice B is the correct answer.

In the explanation "that" refers to "the formation of social groups." But "That" can refer to the subject only without any modifiers. What am i missing?
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Can anyone please explain how option B is better than option E ( apart from wordiness )?
I marked E thinking it to be better than B because B can mean :
1) the formation of social groups of young children, like social groups (that ) of the adults who raised them, is based on common interests and hobbies.
OR
2) the formation of social groups of young children, like the formation of social groups(that ) of the adults who raised them, is based on common interests and hobbies.
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