Mr Whitmore, who has been under pressure to restructure Kodak, said Eastman Chemical would be spun off as an independent public company by the end of the year, with its shares distributed among Kodak's shareholders.
Eastman's current management is to head the new corporation, which, with an annual turnover of dollars 3.9bn ( pounds 2.6bn), would rank as America's 10th-largest chemical company.
About dollars 2bn worth of Kodak's dollars 7bn long-term debt will be transferred to Eastman, considerably strengthening the photographic company's balance sheet. One credit agency that had indicated it might be about to downgrade Kodak's debt ratings said after the announcement that it would probably now raise them. Kodak's profits were already expected to set a record in 1994. But Mr Whitmore said they would now 'substantially exceed anything we have talked about in the past'.
Savings from the restructuring, earlier estimated at dollars 400m for 1994, would now be 'substantially higher.'
Further details of the spin-off will be made public in September, when Mr Whitmore said he would also name a finance director to replace Christopher Steffen, the zealous cost- cutter who left last April after only two months in the job, prompting a sharp sell-off of Kodak shares.
At the time, Mr Whitmore promised to announce big changes and yesterday he said his review would cover the whole corporation, except its core consumer photography business.
'This is the large divestiture that we have alluded to,' Mr Whitmore said in New York. 'But this is not the end of the process.'
Earlier speculation had centred on a possible sale of Kodak's loss-making copier business, but analysts believe the division will become increasingly central to its future as an 'imaging' technology company rather than a film manufacturer.
The divorce from the chemicals business thus makes good sense, strategists say.
It also raises questions about the future of Kodak's other main product line, pharmaceuticals, which it operates in close partnership with France's Elf Sanofi.
Kodak created the Eastman division in 1920 to supply chemicals for its photography products. But in recent years, the group has diversified into packaging plastics and cellulose acetate filter products, and Kodak accounts for less than 10 per cent of its sales.