.arc is a basically a compressed folder with all the necessary files in. This type of compression is used to compress the Manual files in Virtual Console Channels.
Now there is a tool made by HowdyC that can unpack that type of compression:
U8 Tool v2.0 (Supports packing/unpacking, all header formats, recursive folders and lz77 compression)
Use that to unpack and repack the .arc file.