Supermarket supremo Sir Ken Morrison today unveiled details of a new £3 billion bid for store rival Safeway and declared it "the best news for Bradford".

The Morrisons' chairman said his firm had reached an agreement with Safeway's board on the terms of the new offer, which is slightly higher than the original deal tabled nearly 12 months ago.

And Sir Ken confirmed the deal would create about 1,000 jobs in Bradford, as exclusively revealed last week in the Telegraph & Argus.

If it is accepted by shareholders, the new company will have its headquarters in Gain Lane, Thornbury, from 2005. The HQ is likely to house about 1,500 staff - twice as many as are based at the existing Morrisons HQ in Thornton Road.

Some of the jobs will be taken by existing Safeway employees who will move from Hayes in Middlesex.

But jobs will also be created at the Farmer's Boy factory in Cemetery Road, Bradford, which will become a 24-hour operation, effectively doubling the 800 staff.

"I am absolutely sure that this is the best news that Bradford has seen for many years, and as was shown in the article in the T&A last week, it will have a major impact on Bradford," said Sir Ken.

"It is going to take a little while logistically to get everyone in place in Bradford, but it is great news."

Asked about the impact the publicity surrounding the bid had brought for Bradford, Sir Ken said: "It is what we have been trying to achieve for many years."

Joint managing director Bob Stott added: "The new head office will be in Bradford from 2005 and the additional jobs that will bring will be hugely beneficial."

The new combined group will have likely sales of £13 billion a year and boast 552 stores across the whole of the UK, making it capable of competing with the existing "big three" of Tesco, Sainsbury and Asda. The distinctive Morrisons format would be extended to the larger Safeway stores.

"The logic of combining Morrisons with Safeway is every bit as powerful today as it was a year ago," said Sir Ken. "This merger will be a transforming step for Morrisons, enabling us to take the distinct Morrisons formula and our passion and flair for food retailing to customers everywhere in the UK.

"Over the past 11 months, we have both grown Morrisons' existing business and gone through a complex regulatory process. I am confident that the team will be able to integrate Safeway swiftly and effectively."

As part of the tie-up, Morrisons confirmed it will seek to achieve £150 million of cost savings through the merger. About £80 million of that will come from combining the head offices and central operating functions of the two companies.

Today's announcements follows a lengthy takeover saga dating back nearly 12 months due to the Competition Commission ordering an investigation into the deal.

Shareholders will receive offer documents early in the New Year with Morrisons hopeful it can seal the process by the end of the first quarter of 2004. The deal is worth one new Morrisons share plus 60 pence for each Safeway share, and values the company at £3 billion.

But Sir Ken said the major factor was the impact on Safeway's performance of rolling out the Morrisons' brand.

"Putting Morrisons and Safeway together will create a powerful national retailer able to challenge the other three majors and will appeal to both customers and suppliers alike."

He added: "It a matter of great priority that we get cracking. Safeway has suffered for the last 12 months while there has been uncertainty."

The terms of the deal have been endorsed by the board of Safeway. Chairman David Webster said he was "delighted" that the deal had been secured with Morrisons and said he was confident that the new company would have "a great future".

"In January, we chose to merge with Morrisons because we believed it was the only deal that was both in the interests of shareholders and likely to win regulatory approval," he said.

In early trading today Morrisons' shares price rose 8p to 231p.