You need to tell them. If it's not a big deal to you, then you should say so. If you have feelings for this guy too then you also need to say this. We live in a small world and it amazes me how people find things our. He may not think it's a big deal and casually mention it to someone and then your friend can find out.
Keep in mind your friend will be hurt that you went after someone they had their eye on, even if he came onto you. It sucks having to tell our friends things that may hurt them but not saying anything will hurt more.