Donaldson, Lufkin & Jenrette, Wall Street's 16th-largest brokerage firm, agreed yesterday to acquire ACLI International Inc., a privately owned multi-billion-dollar commodity trading business headed by Adrian C. Israel, chairman of People's Drug Stores Inc.

ACLI will become a wholly owned subsidiary of DLJ but will continue to operate autonomously with its present management, the companies said in a joint announcement.

The $42 milllion transaction will make the Israel family the largest stockholder of DLJ, will make A.C. Israel vice chairman of DLJ and will add him and Sam Israel Jr., a cousin, to the DLJ Board.

The merger, which is expected to be completed next month, came after more than two years of talks between the two firms, sources close to the companies said.

In a joint statement, the companies said a merger would be "a major step toward accomplishing two of DLJ's strategic objectives" -- expanding its international business and adding "the expertise of a premier name in the commodity and international merchant fields to DLJ's base of capabilities."

The deal will combine two companies with almost completely different businesses and contrasting ownerships, but similar operating styles: Both specialize in institutional business and handle only the largest individual investors.

DLJ's specialty is Wall Street and the private securities field. Through its correspondent services division, DLJ handles more than 10 percent of all New York Stock Exchange orders; it also manages $12 billion in pension funds and provides investment banking and research services.

ACLI is best known as a commodity trading firm, dealing in raw materials ranging from coffee to gold through a network of 19 offices around the world. Its ACLI Commodity Services subsidiary is a major commodity futures brokerage, and ACLI Government Securities deals in government bonds and notes.

At present DLJ does not handle trading in either physical commodities or commodity futures, the chief businesses of ACLI.

The initials ACLI stand for Adrian C. and Leon Israel, its founders. The $3-billion-a-year business is privately owned by members of the Israel family and other senior management officials and discloses little about its operations.

In contrast, DLJ was the first Wall Street brokerage to sell stock to the public, requiring the company to reveal most financial details.

Though ACLI is based in White Plains, N.Y., north of New York City, A.C. Israel is no stranger to Wall Street. He once was chairman of Bache Group Inc. and has had offers to merge with other firms, including Goldman Sachs Co.

No cash is involved in the merger transaction. ACLI's shareholders will receive $22 million worth of DLJ convertible preferred stock and another $20 million of notes from DLJ.

The preferred stock can be converted into 1.7 million shares of DLJ common stock, which would amount to just under 15 percent of the total DLJ shares.

The biggest shareholder of DLJ now is Saudi Arabian investor Sulaiman Olayan, who owns about 10 percent of its stock. DLJ Chairman Richard Jenrette and other present and former employes reportedly hold voting control of the firm.

DLJ said the merger would increase its capital base from $115 million to about $160 million. DLJ earned a profit of $10.7 million last year on revenues of $132 million, mostly commissions.

ACLI traded about $3 billion worth of commodities last year and does not disclose profits.

The DLJ-ACLI combination would be the latest in a series of Wall Street mergers. Bache Group Inc. has been acquired by Prudential Insurance Co., Shearson Loeb Rhoades was acquired by American Express Co., and Soloman Brothers is merging with Phibro Corp., a major commodity merchant.