Paramount-Warner’s ‘Too Low’ Deal Odds Leave Room for Arb Profit

Paramount Skydance Corp.’s proposed takeover of Warner Bros. Discovery Inc. just won crucial US approval — but with many hurdles remaining, traders still see opportunity to profit from how this $110 billion transaction will play out.

The gap between Warner Bros.’s stock price and Paramount’s $31-a-share offer stood at $4.76 as of Wednesday’s close, about as wide as it was before the Justice Department closed its investigation into the deal last week.

That spread didn’t budge much primarily because the DOJ’s approval was widely expected. Other looming risks pose more of a threat, including potential legal challenges from states led ...