Spain striker David Villa finally negotiated a deal to improve his contract and stay at Valencia, as the club turned down an offer from Real Madrid.

According to the new deal, Villa is set to stay at his current club until 2014, after prolonging his contract one year with a pay rise.

The forward's agent Jose Luis Tamargo met Valencia officials early on Wednesday and the deal was signed hours later.

Vicente Soriano, president of the troubled Spanish club, said Real Madrid had offered 40 million euros ($58.7 million) plus another player in exchange for Villa. Despite its current financial crisis, Valencia turned them down.

"I did not like Real Madrid's approach," Soriano complained.

Villa - one of the stars of the Spain team that lifted the trophy at the Euro 2008 - expressed his satisfaction for the deal.

"It is a very happy day for me. I thank Valencia for this gesture and for everything they have given me," the striker said.