I'm currently interning at a company A and my supervisor asked if I would be interested to continue working here. The conversation mainly consisted of him discussing with me if I would be interested in learning some new skills I would need to develop for the projects I would work on in my full-time job, what I am interested in working on, also some technical questions. I say conversation, although it felt like an interview as it happened out of the blue (we had been discussing about the end date of my internship a few hours before this conversation occurred but even then there were no hints a full time job was available).
I said I was interested and discussed mainly the skills I would need to develop but didn't ask for the specifics like the salary as a) he said it was a tentative offer, and that there might be other applicants, b) I was also interviewing with company B at the time and c) I would like to work there if I didn't get the job at company B. I asked him if I could speak to him about it again in a month, but I didn't mention about interviewing with other companies (he might have guessed, obviously).
While my supervisor and the team are amazing (I've learned a lot here and they're all really nice), I got an offer from company B whose work I'm more interested in (the domain is different) so I'm planning to accept that.
While it wasn't a formal job offer, it is still my responsibility to tell him I am not interested as I had previously expressed interest and I don't want to burn any bridges. I know I'm not irreplaceable and its not a big deal but I would like to maintain a positive relationship with him even after I leave the company. What would be a polite way of telling my supervisor that I really appreciate the offer but I will not continue here/am not interested in the full time offer?