Tesco boss Sir Terry Leahy said: “We have always understood that competition policy limited consolidation in our industry. The authorities are now being asked to consider a major structural change among the four national supermarket chains.
“We therefore believe the interests of consumers would best be met if Tesco led any restructuring."
In a statement Tesco said if a restructuring of the market was to involve the three major players, that it was best placed to lead this change.
On local choice, Safeway’s portfolio was complementary its own estate and believed it should be able to retain around three-quarters of Safeway's stores while ensuring competitive local markets.
Tesco would reduce Safeway's prices which it said were 11.7% higher than Tesco's based on the 6,000 key lines found in both store chains. It would also roll out its Clubcard loyalty programme to Safeway stores.
It has identified significant cost savings through improved operational efficiency, central cost savings and supply chain benefits.
And as it improved performance of retained Safeway stores, it would create many store jobs, offsetting job losses from the closure of Safeway's head office.
The UK’s leading supermarket group said it “flourishes on competition and will work with the regulatory authorities to ensure that the market remains competitive after any consolidation”.
Industry figures show Tesco has a market share of some 25.8%, ahead of Sainsbury with 17.2%, Asda on16.6%, Safeway is fourth with 9.8%, while Morrisons has 6%.
Tesco’s offer would include a mix of cash and new Tesco shares and would be “compelling to Safeway shareholders and create value for Tesco investors”.