This study documents a recent trend of diversifying acquisitions made by financially distressed firms and investigates the motivation for such acquisitions. Firms in financial distress engage in M&As as much as non-distressed firms between 2010 and 2014. Exploiting an exogenous shock in bankruptcy risk for financially distressed firms, I find that distressed firms reduce acquisition activities upon a reduction of bankruptcy probabilities. Specifically, distressed firms become more focused by cutting acquisition spending by 53% and by doubling divestitures. The results support the diversifying motivation of acquisitions by distressed firms, rather than the growth opportunity motivation that firms are capturing external growth opportunities. These findings indicate another distortion of financial distress in investment that when firms are under the pressure to meet debt obligations, it creates an incentive for firms to diversify and drives the investment style to external expansions.